Goldman Upgrades Estee Lauder, Sees Growth Returning As China, Travel Retail Stabilize

Core Insights - Global beauty giants are redefining growth strategies to reshape consumer experiences and set new industry benchmarks, with Estee Lauder Companies Inc. expected to generate topline growth as early as the fiscal first quarter starting in September, followed by a return to double-digit EBIT margins in FY27 and beyond according to Goldman Sachs [1] Company Analysis - Analyst Bonnie Herzog upgraded Estee Lauder's rating to Buy and raised the price target to $115, indicating confidence in the company's strategic vision "Beauty Reimagined" [2] - The management's consumer-first approach and focus on faster on-trend innovation aim to make Estee Lauder a more agile beauty company, although this has led to underperformance in recent years [3] - Estee Lauder's shares were up 5.81% at $92.74, nearing its 52-week high of $97.44 [3] Industry Trends - The prestige beauty industry has mid-single-digit long-term growth potential [5] - Stabilizing business trends in Estee Lauder's key China market, with mainland China sales expected to return to mid-single-digit growth in the latter half of 2025 [5] - Recovery in travel retail, particularly with Hainan returning to growth in May [5] - Anticipated market share gains in the U.S. in the latter half of 2025 after several years of contraction [5] - Strong savings are expected to drive a recovery in gross margins, supporting EBIT margin expansion in FY26 and beyond while fueling continued reinvestments [5]