Estée Lauder Stock Among Top S&P 500 Performers After Deutsche Bank Upgrade

Key Takeaways

Estée Lauder ( EL ) stock is turning heads.

Shares of the cosmetics company were among the top performers of the S&P 500 Monday after Deutsche Bank upgraded its rating of the stock to "buy" from "hold" and lifted its price target, saying a makeover of the firm's strategy appears promising.

For years, Estée Lauder belatedly reacted to trends and neglected key markets while over-concentrating on Chinese consumers, Deutsche Bank analysts wrote in a research note Sunday. The company has gotten better at responding to what's in fashion by broadening its focus and decentralizing decision-making, they said.

"Clearly, growth at EL has lagged behind peers in recent years (exacerbated by undershipment to clear excess trade inventory)," the note said. "However, going forward, we see EL in a far better position to at least keep pace (if not surpass) market growth rates."

Shares sank to below $50 in April from nearly $375 in January 2022, but Deutsche Bank thinks "that many of the root causes of this decline have now been addressed" and raised its price target to $95 from $71. The average price target among analysts who follow Estée Lauder and were polled by Visible Alpha is about $68.

Estée Lauder stock, which entered Monday essentially flat for the year, was up 4% to roughly $78 in recent trading.

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