Stifel: Estee Lauder Now Worth $99/Share

In a report published Monday, Stifel analysts maintained a Buy rating on

, with raising the price target from $92 to $99, saying that MAC Cosmetics may drive $4.4bn in incremental company sales from new distribution and strong freestanding store productivity. MAC Cosmetics seems to be the company's "most important growth brand." The unit generated sales of $2.1bn in FY2014, which represented 19 percent of overall sales and accounted for 29 percent of sales growth between FY2010 and FY2014. In the report Stifel noted, "We anticipate continued double-digit growth for the brand for the foreseeable future driven by its affordable luxury positioning and opportunity for increasing global points of distribution, especially in developing markets." The analysts expect MAC points of sale in developing markets to increase to at least 6,342, from the current count of 698, and out of 2,157 total points of sale. This would generate about $4.4bn of incremental sales. "The result would increase overall Estée Lauder Companies sales by 40% from the F2014 base," the analysts said. Developing markets accounted for 13 percent of company sales, with about 50 percent being generated from Mainland China. This compares with the luxury company peer average of 42 percent and large-cap consumer products company average of 43 percent. "We believe increasing MAC points of sale should include a focus on freestanding stores as productivity as measured by sales per square foot is amongst the highest global brands. Specifically, we estimate sales per square foot for all company-operated stores at $1,246 and for MAC stores at $1,371," the analysts wrote. "We estimate MAC is worth $28 per EL share, or about 33% of the company's current $32.0bn enterprise value…Our new $99 price target places the remaining business at a 5% premium to peers," the report added.