CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our 12-month target of $136, up $17, is 33x our FY 25 (Jun.) EPS of $4.13 (down $1.27; FY 24’s cut $0.04 to $2.23), a premium to the 10-year average forward P/E of 32x. Q2 (Dec.) adj-EPS of $0.88 (-42% Y/Y) beat by $0.32 on revenue of $4.3B (-8% Y/Y), 1% above consensus. 8% organic decline was comprised of declines of 14%, 7%, and 1% in EMEA, Asia-Pacific, and the Americas, respectively. Expense management, despite a tax headwind, yielded the EPS surprise. EL announced a restructuring element to its profit recovery plan trimming 3%-5% of FY 23’s headcount, netting $600M in restructuring charges, and lifting incremental profit by $350M-$500M to $1.1B-$1.4B with benefits expected in FY 25 and FY 26. EL engaged Alvarez and Marsal for program execution. Notably, EL improved its inventory position to 16% of NTM revenue vs. 18% last quarter. We view the recovery plan favorably, but shares trade at a premium in an uncertain macro environment with fundamentals below historical averages, limiting upside, in our view.