Estée Lauder stock collapse presents a buying opportunity on the downturn - Citi

The collapse of Estée Lauder's quotations after a weak forecast for fiscal year 2026 is seen by Citi analysts as a good entry point. The bank recommended buying the cosmetics company's shares on the downturn, pointing to signs of recovery in key markets.

Citi analyst Filippo Falorni upgraded Estée Lauder securities from Neutral Hold to a Buy recommendation, CNBC writes. He also reiterated a target price of $120, suggesting a potential upside of 20% from the close of trading on February 6.

The company's shares were up nearly 9% at the moment on Friday, after losing a fifth of their value the day before due to what Wall Street said was insufficient revenue growth and a cautious outlook for the year. Estée Lauder warned of weak consumer activity in the U.S. and said Donald Trump's duties would cut its annual profit by $100 million, but a Citi analyst believes the company's sales are showing signs of improvement in key markets. He attributed the sharp market reaction to inflated expectations and advised to buy back securities on the drawdown. They ended the trading session on February 6 in the plus by 2.9%.

"We see clear improvement in Estée Lauder's revenue and market share dynamics in mainland China, Hainan and the U.S., which could lead to the company exceeding its guidance for the second half of 2026 and beyond," Falorni wrote.

Estée Lauder is in the midst of a multi-year business realignment that an analyst says has improved the stock's fundamental outlook, Seeking Alpha reports. The launch of sales on Amazon and the TikTok Shop, as well as a shift to a consumer-focused and innovation-driven strategy, is helping the company stabilize a business that sagged during the pandemic, the publication writes.

Raymond Jones analyst Olivia Tong believes the second-quarter costs are temporary. "Organic sales growth accelerated in three of the four regions and product categories, the U.S. is stabilizing, China is accelerating, and operating margins have returned to double-digit levels," Tong is quoted by Barron's as saying.

TD Cowen analyst Oliver Chen also saw a rebound in global luxury markets, as well as the first signs of a turning point in China. He noted that Estée Lauder's strategy is starting to translate into both revenue growth and margin expansion.

Over the past day, analysts, whose ratings are tracked by MarketWatch, have taken a more bullish stance on the company. Its shares are now recommended to buy by 12 analysts, while on February 5 there were ten such analysts. 14 analysts keep neutral position and only one advises to sell the company's securities. The average target price is $110.2, which implies growth of quotations by about 11%.

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