Oppenheimer downgrades this cosmetics stock, says gains will be harder to come by
Oppenheimer thinks Estee Lauder will have trouble meeting Wall Street’s high expectations. The firm downgraded the luxury cosmetic stock to perform from outperform on Monday and removed its $250 price target. The stock closed at $188.29 per share on Friday. “As we look forward, we are harder pressed to see shares outperforming from current levels amidst aggressive Street estimates, a still premium valuation vs. history, and risks of a conservative management guide in August,” analyst Rupesh Parikh said. “In contrast to the past, EL is no longer a beat and raise story, in our view, which suggests increased risk to the company’s-premium-multiple.” Parikh added that Oppenheimer expects further caution on forward guidance from company management in the future, although the company could still recover over a longer period thanks to its market prominence. “We believe the company’s positioning to the global prestige beauty category, a strong management team, and consistent track record with M & A position it to continue gaining market share over the longer-term,” he said. Shares have been under pressure from the start of the year with a 24% loss. Last month, the stock tanked 17% after Estee Lauder posted weaker-than-expected earnings for the fiscal third quarter. The company also slashed its fiscal year earnings guidance. EL YTD mountain Est?e Lauder year to date — CNBC’s Michael Bloom contributed to this report.