Many of Estée Lauder‘s (EL 0.44%) perfumes and cosmetics make for ideal holiday gifts for folks who appreciate such products. Is the storied company’s stock also a great buy for the season? If an analyst’s latest take on the shares is any indication, the answer is indisputably yes.
In the run-up to holiday season, that analyst reiterated her quite bullish stance on the company’s prospects. Here’s her argument for loading up on Lauder.
Smells like a buy
Last Friday, DA Davidson’s Linda Bolton Weiser published a new research note on Estée Lauder. In it, she maintained both her existing buy recommendation on the stock, and her $81 per share price target.
According to reports, Weiser’s latest update centers on the company’s sales to China, a market that is currently struggling with relatively low economic growth and a general consumer pull-back.
The analyst pointed out that roughly 30% of sales are China-related, and due to the rather volatile state of the country’s economy, Estée Lauder recently suspended providing annual guidance. Weiser believes that this market will continue to be a sore spot for the company, contributing to a 15% to 16% year-over-year drop in sales in its current (second) quarter of fiscal 2025.
New year, new leader
However, there are potential bright spots ahead, according to the DA Davidson analyst. After a fairly exhausting takeover saga, Estée Lauder will soon see a C-suite refreshment with the Jan. 1 arrival of a new CEO, company veteran Stéphane de La Faverie. In Weiser’s view, the stock price could be driven by his initial actions and remarks.
I personally feel that Estée Lauder, which isn’t the most innovative company in its field, doesn’t have vast potential for fundamental growth. However, its share price is compellingly low enough to consider a buy on that criterion alone. I think this might prove to be something of a sleeper stock, but much will depend on de La Faverie’s early moves, as Weiser opined.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
