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Estee Lauder Upgraded by Two Analysts on Strong Earnings

Two analysts raise their ratings on beauty products company Estee Lauder following its strong quarterly earnings report.
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Estee Lauder  (EL)  shares rose to a record high Monday as two analysts raised their ratings on the beauty products company following its strong quarterly earnings report.

J.P. Morgan analyst Andrea Teixeira double upgraded Estee Lauder to overweight from underweight, and lifted her price target to $299 from $208. Jefferies analyst Stephanie Wissink upgraded the stock to buy from hold and boosted her price target on the shares to to $310 from $240.

Estee Lauder traded at $281.65, up 3.24%, after hitting a peak of $283.49 earlier Monday. It has jumped 41% over the last six months amid optimism that vaccines will spark an economic rebound and increased shopping along with it.

The company last week reported fiscal second-quarter earnings of $873 million, or $2.55 a share on an adjusted basis. Revenue grew 5% from the year-earlier quarter to $4.85 billion. 

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Analysts were expecting Estee Lauder to report earnings of $1.69 a share on revenue of $4.49 billion.

Those numbers represent "clear signs" that Estee Lauder has successfully shifted to digital sales much quicker than expected, Teixeira said. That digital prowess beat back the "infinite shelf competition" the company faces. Its brands registered an "impressive" performance during the holiday shopping period, she said.

As for Wissink, she called the earnings number "strong." They illustrate buoyant results in China and a "full reshaping" of the company's model into the digital realm. Innovation is "starting to kick back in," and China is “THE single most critical driver of the model," she wrote.