Estee Lauder (EL) is positioned to be a “more competitive enterprise” with its restructuring plan, RBC Capital Markets said in a note to clients Tuesday.
Estee Lauder on Monday announced a two-year restructuring program to generate $350 million to $500 million in annual gross benefits as part of its profit recovery plan. The restructuring includes a 3% to 5% reduction of its workforce globally.
“We see [the restructuring plan] as a constructive step in the right direction, but remain on the sidelines until we see evidence that [Estee Lauder] is executing on its plan,” said RBC analysts.
The investment firm raised its price target on Estee Lauder to $131 from $115 given increased profitability estimates tied to the profit recovery plan, and kept its sector perform rating.
The company said Monday it forecasts incremental operating profit of $1.1 billion to $1.4 billion, an increase from the prior $800 million to $1 billion, under its profit recovery plan.
RBC now expects fiscal year 2024 net sales to fall 0.5% from its previous estimate of 1% decline. It lowered its earnings per share estimate to $2.15 from $2.31, according to the note.