Morgan Stanley analyst Dara Mohsenian maintains $Estee Lauder (EL.US)$ with a hold rating, and adjusts the target price from $100 to $85.
According to TipRanks data, the analyst has a success rate of 63.8% and a total average return of 8.1% over the past year.
Furthermore, according to the comprehensive report, the opinions of $Estee Lauder (EL.US)$'s main analysts recently are as follows:
Estee Lauder's first-quarter beat was overshadowed by second-quarter guidance that didn't meet expectations, a withdrawn outlook for the second half of the year, and a reduction in the dividend. The analyst argues that there is currently a significant lack of clarity and anticipates potential changes in strategy and additional productivity measures from the soon-to-be-appointed executive team, which is expected to introduce a comprehensive restructuring plan to address the company's substantial cost structure.
The recent reduction in the quarterly dividend to 35 cents per share, when annualized, suggests an anticipated net income of $1.2 billion, equating to an earnings power of approximately $3.50 per share over time. This is based on the company's commitment to maintaining a dividend payout ratio close to 40%. The current market sentiment suggests it might be too early to capitalize on the stock's lower price, given the ongoing economic deceleration in China and the impending transition to a new CEO in January.
The downgrade was due to 'persistent' sales declines and limited future visibility, which prompted the company's management to withdraw its financial guidance. The company is experiencing operating deleverage due to lower than anticipated volumes in China and Asia travel retail. As a result, the execution of its plan and returns are expected to be delayed. It is suggested that investors wait for clearer signs of demand improvement before proceeding.
Note:
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