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Estee Lauder Adjusting To A Tougher Environment

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Bank of America Merrill Lynch reiterated its Buy rating on Estee Lauder Companies Inc (NYSE: EL) saying that though the company is navigating a challenging environment, its overall growth is still well ahead of peers.

Estee Lauder, a beauty products company, reported better-than-expected fourth quarter EPS of $0.43, but the outlook for first quarter and FY17 was lower than expected.

"While headwinds include inventory destocking in the U.S. given Macy's store closures (there were already ~40 closures in FY16), as well as destocking in the Middle East (strong growth in FY16), we see sufficient growth drivers to drive +6-7% local-currency sales growth for the FY," analyst Olivia Tong wrote in a note.

Tong, who cut the price objective by $3 to $103, cut its FY17 EPS to $3.42 from $3.52 (versus management guidance of $3.38 - $3.44), reflecting lower margins.

"While the environment has become more challenging, with expectations set, initiatives rolling out over the course of the year, and distribution gains to boot, we believe the company is providing adequate flex to meet both its L/C sales and EPS targets, with upside should current macro assumptions prove conservative," Tong added.

At time of writing, shares of Estee Lauder were down 0.47 percent to $91.30.

Latest Ratings for EL

DateFirmActionFromTo
Feb 2018Stifel NicolausMaintainsBuyBuy
Feb 2018Bank of AmericaMaintainsBuyBuy
Feb 2018Morgan StanleyMaintainsOverweightOverweight

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Posted-In: BOAML Olivia TongAnalyst Color Price Target Reiteration Analyst Ratings

 

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