Piper Jaffray Raises Price Target on Estée Lauder (EL) Following Strong 2Q
Piper Jaffray reiterated an Overweight rating on Estee Lauder (NYSE: EL), and raised the price target to $99.00 (from $98.00), following the company's 2Q earnings report. EL continues to outperform expectations despite macroeconomic headwinds in its increasingly global business model. In FQ2, EL was able to anticipate and execute on current trends, and deliver incremental savings through to the bottom line as the company reported net sales growth of 8% in CCY, and significantly higher EPS growth of 18%.
Analyst Stephanie Wissink commented, "We remain buyers of EL shares following a strong FQ2 report and are optimistic about potential upside given the company's continued sales growth and improving earnings quality. The Q2 beat will be balanced in Q3 with incremental investments into platform/ process and the roll-out of the millennial-focused Estee Edit color cosmetics line. We are maintaining our FY16 net sales expectations at 8% CC and adjusting FY16 EPS to $3.10, the midpoint of guidance including a $0.05 incremental FX headwind. We are intrigued by the phasing of the investment cycle, which appears to be shifting from largely process/ platform to brands/experience - a signal that ROIC likely improves in coming years. We are attracted to the fundamentals in prestige beauty and see EL as well positioned to outperform. Raising PT to $99/sh ($98 prior)."
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Shares of Estee Lauder closed at $90.99 yesterday.