Estee Lauder Shares Rise As Wells Fargo Hikes Price Target On China Improvement

Shares of Estee Lauder were trading higher on Wednesday after Wells Fargo hiked its price target on the stock by $30 to $90, citing an improvement in China, which has been a core problem for the MAC lipstick maker in recent years.

Estee Lauder stock rose 1.1% to $86.49 at the time of writing. Retail sentiment around the stock was in the ‘bearish’ territory, compared to ‘neutral’ a week ago, according to data from Stocktwits.

Wells Fargo maintained an ‘Equal Weight’ rating on the stock, according to The Fly. The brokerage believes China sales would help begin a recovery in earnings for Estee.

In May, the cosmetics giant had forecast a bigger-than-expected drop in fiscal 2025 sales driven by a slowdown in the American market and a longer-than-expected recovery in the China region.

Sales in the Chinese market have been declining for the company over the past three years, initially due to pandemic-related disruptions and later to sluggish consumer sentiment, inventory challenges in the travel retail sector, and shifting spending habits among shoppers in the country.

Last year, the company named insider Stephane de La Faverie as its new CEO, replacing veteran Fabrizio Freda, as the Clinique skincare maker attempts to revamp its business at a time when demand for beauty products has flattened in the United States and China.

Estee has also implemented a plan to cut costs and regain profitability by reducing its workforce, streamlining operations, and making changes to the supply chain, aiming to achieve $1 billion in annual savings by fiscal 2027.

It has also doubled its investments in products and has been rolling out new launches of existing products, such as Re-Nutriv and MAC, to attract customers.

EL stock has surged nearly 15% year-to-date, but it is down around 18% over the past 12 months.  

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