Dana Telsey Is Going Long Estee Lauder

In a report published Tuesday, Telsey Advisory Group analyst Dana Telsey upgraded the rating on

from Market Perform to Outperform, while maintaining the price target at $99. Estee Lauder reported its 4Q topline growth for the quarter marginally short of expectations. On a reported basis, topline declined 7 percent, versus expectations of a 6 percent decline. The company's shares came under pressure following the results and a downward revision in the long-term operating margin outlook, from its prior target of 17.5 percent for FY17 to 16.8-17.2 percent in FY18. Analyst Dana Telsey said that topline momentum in Estee Lauder's business remained "healthy," with the company continuing to "take share in a growing category" and management projecting FY16 net sales growth at 8-10 percent on a constant currency basis. In the report Telsey Advisory Group noted, "We believe that the company's guidance is likely conservative, with opportunity for expense management and benefits from SMI initiatives to offset the increased investment spending plans." Telsey believes that the company could continue "its pattern of reporting better than expected earnings through FY16, supporting stock price appreciation," while adding that "yesterday's sell-off" could be considered "as an attractive entry point."