Estee Lauder (EL) is expected to deliver fiscal Q1 results on Nov. 2 that "achieve the consensus bar" and reiterate its full-year guidance, even as consumer headwinds in China remain a concern, RBC Capital Markets said in a report Thursday.
Beauty and luxury earnings have been "generally encouraging," despite macro headwinds, amid strength in fragrance and prestige skincare and improving travel retail trends, according to the report.
The firm said Estee Lauder's productivity and restructuring benefits should help protect earnings per share even if management points to some top-line weakness. It also believes the company's fiscal 2027 guidance is "reasonable and has more upside potential than downside risk."
While RBC sees a "neutral risk to reward" for the quarter, it remains constructive on the longer-term turnaround, saying "the worst is in the past" and a "steady recovery is underway," according to the report.
RBC has an outperform rating on Estee Lauder, with a price target of $120.
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