Estée Lauder has raised its forecast amid rising perfume sales. What does Wall Street think?

Estée Lauder, which owns the Mac, La Mer, Le Labo, and Tom Ford brands, has raised its forecast for organic sales and profit growth amid strong demand for fragrances. This is a sign that the business recovery strategy launched last year is beginning to pay off, according to Bloomberg. In light of the positive news, Goldman Sachs raised its price target for Estée Lauder shares and now expects them to rise 18% over the next 12 months.

Estée Lauder announced on November 2 that its organic sales for the current fiscal year, which ends on June 30, 2027, will grow by 4–5.5% instead of the previously expected 3–5%. The adjusted earnings forecast has also been raised—from $3.10–3.35 to $3.20–3.45 per share.

In the quarter that ended September 30, Estée Lauder’s revenue rose nearly 7% to $3.72 billion, while analysts’ consensus estimate was $3.65 billion. Adjusted earnings per share were $0.72, compared with the expected $0.51.

Revenue from skin care—Estée Lauder’s largest division—rose 4.8% last quarter to $1.65 billion, while revenue from color cosmetics rose 1.8% to $1.05 billion. Sales of hair care products, by contrast, fell 0.8% to $128 million.

Fragrances were the main driver of revenue growth: sales in this category rose 19% to $861 million. Estée Lauder is attracting more and more young consumers who choose fragrances differently than the previous generation—for example, by purchasing different perfumes for different occasions, the company’s CEO, Stéphane de La Faverie, told Bloomberg.

According to him, the sales growth was driven by the renewal of fragrance lines and the launch of products in a more affordable price segment. For example, one success story was the Cocktails Collection fragrance line from Kilian Paris, which turned out to be the company’s fastest-growing brand last quarter. As part of its efforts to attract a younger audience, the company also launched the fragrance Glimmer last summer, which is endorsed by actress Hailee Steinfeld.

Following the release of the report, Goldman Sachs analysts maintained their “buy” rating on Estée Lauder shares and raised their price target from $124 to $129—an 18% increase over the previous closing price.

Following the release of the earnings report, Estée Lauder shares rose 3.5% in pre-market trading but gave up all those gains during the regular trading session. At the time of publication, they were down 2.7%. Overall, Estée Lauder shares have significantly underperformed the broader market this year—by the close of trading on October 30, they were up just 4%, compared with an 11% gain for the S&P 500 index.

Estée Lauder’s improved outlook signals that its business recovery strategy is beginning to yield results, according to Bloomberg. De La Faverie launched the strategy, called “Beauty Reimagined,” last year with the goal of improving profitability. It combines investments in fast-growing sales channels with cost cuts, including layoffs. In May, the company announced plans to cut up to 10,000 jobs worldwide as part of this restructuring program.

Estée Lauder is also working to shift sales from brick-and-mortar stores to online channels, including Amazon and TikTok, to more actively engage a younger audience and capitalize on new consumer trends, according to Bloomberg. As part of this strategy, Estée Lauder is developing more affordable fragrance lines and investing in brand promotion. China remains an important market for the company, accounting for about one-fifth of its revenue in the last fiscal year.

This article was AI-translated and verified by a human editor