Goldman Sachs on Estee Lauder (EL): 'FY25 guidance missed expectations will weigh sharply on the stock today'
Goldman Sachs analyst Bonnie Herzog reiterated a Neutral rating and $115.00 price target on Estee Lauder (NYSE: EL).
The analyst comments "Our View - EL reported 4Q24 EPS of $0.64 (vs. GS/FactSet consensus $0.24/$0.26). Q4 organic sales growth of +8% was slightly higher than expectations, as strength in its EMEA segment was partly offset by weaker Americas and APAC. Gross margins were marginally lower than consensus expectations (albeit slightly higher than ours), though lower SG&A spend aided in higher-than-expected EBIT margin for the quarter. Lower interest expense and tax rate were also significant EPS tailwinds. While results were generally fine, mgmt's outlook regarding the prestige beauty market (i.e., tempered NA growth outlook and declines in China) and consequently its FY25 guidance fell well below expectations, even though expectations had come in into the print. Mgmt expects FY25 organic sales growth of -1% to +2% (vs. GS/consensus 6.9%/6.7%) and FY25 diluted EPS to be between $2.75-$2.95 (vs. GS/consensus $4.37/$3.97). For 1Q25, mgmt expects organic sales growth to decline -3% to -5% and diluted EPS in the range of $0.02-$0.10. EL also announced that its CEO Fabrizio Freda will retire from the company at the end of FY25. Investors we spoke to argued that a mgmt shakeup could help reset expectations, and we expect this news to be viewed favorably as a result. However, we believe the extent by which mgmt's FY25 guidance missed expectations will weigh sharply on the stock today."
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Shares of Estee Lauder closed at $94.97 yesterday.