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The cosmetic company’s weaker-than-expected results triggered an avalanche of disappointment on Wall Street, with 12 firms cutting their price target since Friday morning.
Importantly, besides quarterly earnings, Estee Lauder issued guidance for 2024 that called for diluted net earnings per common share of between $3.50 and $3.75. Analysts were not impressed.
“For all the debate, and estimate cuts over the past few weeks – our own included – we expect there is still likely to be some sticker shock at the magnitude of the FY24 guide down,” wrote Bernstein equity analysts. “Our own $3.96 estimate was met with some surprise over the past week, but comes in above the high end of management’s range of $3.50-$3.75, and we expect that consensus estimates will need to be cut around 25%.”
Morgan Stanley also commented on the stock, saying, “We are lowering FY24 EPS with continued demand softness and an inventory overhang in Asia travel retail, but see negative EPS revisions as likely over here (albeit with low visibility), with EL looking to re-establish confidence and [organic sales growth] strength outside of Asia travel retail.”
Analysts at Piper Sandler were less optimistic.
“FY’24 could be another bumpy year for EL, and while we do think that today’s guidance creates an earnings reset that investors needed, we still struggle to see much intermediate term upside given several layers of uncertainty,” they wrote.
Shares of Estee Lauder have declined by nearly 7% since it published results.
