Analyst: Estee Lauder Stock's Headwinds Already Priced In

Analysts and options traders were bullish ahead of the analyst's note

Deputy Editor
Sep 21, 2022 at 10:05 AM
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The shares of Estee Lauder Companies Inc (NYSE:EL) are up 2.1% at $244.57 at last check, after the cosmetics concern earned a bull note from Goldman Sachs. The analyst upgraded EL to "buy" from "neutral" and hiked its price target to $303, up from $298, noting that China's "zero-Covid" policy and its impact on the company's business remains high but is already priced into the equity's valuation. 

Coming into today, covering analysts were quite bullish, with 13 of the the 16 brokerages following Estee Lauder stock giving it a "buy" or better rating. However, three still recommend a tepid "hold," and the consensus 12-month target price of $308.17 is a 28.7% premium to last night's close, both of which leave some wiggle room for additional upgrades and/or price-target raises. 

Options traders are also betting on upside for EL. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that the security sports a 10-day call/put volume ratio of 2.97 that sits in the 91st percentile of its annual range. This means that calls have almost tripled puts in the past 10 weeks.

Today's price action could put Estee Lauder back on track, as it came into the session with a 35.3% year-to-date deficit. The $225 level has acted as a floor for the security's annual lows, while its most recent rally was cut short by its 180-day moving average.


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