Estee Lauder (EL) Stock Forecast & Price Target

Estée Lauder Cos has demonstrated a robust operational performance with a notable increase in operating margin, rising 290 basis points to 14.4%, significantly surpassing consensus expectations. The company experienced strong growth across regions, particularly in Mainland China where the margin rose sharply by 680 basis points to 15.9%, and reported a YoY organic sales growth of 4%. Additionally, key product categories such as Skin Care and Makeup showed substantial improvement, with Skin Care margins increasing to 22.1% and Makeup rising to 1.5%, further indicating a positive trajectory for the company’s financial health and market demand.

Estée Lauder Cos reported a significant decline in its inventory levels, dropping 5.3% year-over-year, which raises concerns as this decline aligns with a one-time accrual for anticipated returns rather than sustainable sales growth. Additionally, the company's initial guidance for 2026 normalized FFO/sh of $3.12–3.22 suggests minimal growth expectations of 4%, falling short of prior consensus estimates. Moreover, despite some recovery in the travel retail segment, overall revenue pressures persist, especially with notable declines in seasonal customer reservations and ongoing challenges from last year's revenue drop of 28% in that segment.