Deutsche Bank analyst Stephen Powers maintains $Estee Lauder (EL.US)$ with a hold rating, and adjusts the target price from $98 to $75.
According to TipRanks data, the analyst has a success rate of 65.2% and a total average return of 6.1% 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 Q1 performance exceeded expectations but was overshadowed by Q2 projections that didn't meet consensus, alongside the withdrawal of second half guidance and a reduction in dividends. The analyst notes that visibility is currently quite limited and anticipates potential shifts in strategy and additional productivity initiatives from the new incoming executives. There is a belief that these should encompass a more comprehensive restructuring plan to tackle the company's considerable cost structure.
Projecting the newly announced quarterly dividend of 35 cents per share into the future and considering Estee Lauder's dedication to maintaining a dividend payout ratio around 40%, it suggests a net income of approximately $1.2 billion. This translates to an earnings potential of $3.50 per share over time. The perspective that it may be too early to capitalize on the recent price decline is supported, with the ongoing deceleration and uncertainty in China, in conjunction with a new CEO set to take the helm in January.
The 'persistent' sales declines experienced by Estee Lauder, coupled with limited future visibility which prompted management to withdraw its guidance, are notable factors influencing the market's outlook. The lack of expected visibility is anticipated to persist for a significant period. Challenges such as operating deleverage stemming from volumes in China and Asia travel retail falling short of expectations suggest that the company's plan execution and returns may experience delays. Therefore, a cautious approach is advised until clearer indications of demand improvement are evident.
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