Estée Lauder Companies (EL 1.58%) stock was smelling sweet on the last trading day of the week. It had an analyst's recommendation upgrade to thank for that; following the change, investors traded the shares up modestly. They were up by almost 1.3% in late-session trading that day, handily beating the more or less sideways trajectory of the S&P 500 index.
The latest in a series
Well before market open, HSBC's Erwan Rambourg changed his Estée Lauder recommendation to buy from his previous hold. He also made quite the adjustment to his price target, boosting it to $99 per share from the preceding $80.
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According to reports, Rambourg now believes Estée Lauder is positioned to essentially double its earnings between its fiscal years 2025 and 2027. This will derive from active cost cutting and reorganization measures, although he's anticipating improvements on the top line too.
The HSBC pundit isn't the only market professional becoming notably more bullish on the cosmetics sector mainstay. On Thursday, Evercore ISI's Robbert Ottenstein lifted his price target to $100 per share from $90 while maintaining an outperform (buy, in other words) rating. And on Monday, Deutsche Bank's Steve Powers upgraded the stock from hold to buy.
Good reasons for optimism
While Estée Lauder isn't the cheapest stock to buy, at least on the basis of its valuations, the company has shown recent signs of improvement. In Powers' analysis, he cited management's success in boosting its business in China, a key overseas market, and the effectiveness of its cost-reduction strategy. Estée Lauder could very well prove to be a turnaround story.
