Goldman Sachs has reinstated coverage of The Estée Lauder Companies, assigning a Buy rating and setting a $100 price target based on what the firm describes as a visible recovery in both top-line momentum and operating profitability.
The brokerage highlighted several company-level shifts that it views as foundational to the improvement: a refreshed leadership team, the roll-out of a "Beauty Reimagined" strategy and consolidation under a streamlined One ELC operating model. According to Goldman, these initiatives have coincided with a return to revenue growth in fiscal 2026 after three consecutive years of declines, as well as more than 300 basis points of operating margin expansion year-to-date.
Goldman expects that this momentum can be maintained through several operational and market dynamics already evident in the firm’s reporting. The bank points to stronger innovation pipelines, improving performance in China and a less volatile travel retail channel as key drivers. It also expects the company to take share in developed markets. Goldman views the prestige beauty category overall as attractive, projecting mid-single-digit long-term industry growth.
On the modeling side, Goldman projects revenue growth of 4.5% in both fiscal 2026 and fiscal 2027. The brokerage anticipates earnings per share of $2.44 in fiscal 2026, up from $1.51 in the prior fiscal year. Over the calendar 2025-2027 period, Goldman sees EBITDA and EPS compounding at roughly 18% and 40% annually, respectively.
Regional and channel dynamics feature prominently in Goldman’s thesis. China represented 19% of fiscal 2025 sales, and the company reportedly gained share in seven of the last eight quarters in the market. Goldman called out stronger brand-level performance across MAC, Bobbi Brown, Jo Malone and Le Labo as contributors to that trend. Meanwhile, the company’s reliance on travel retail has diminished materially - exposure has fallen to about 15% of sales from a 29% peak in fiscal 2021 - which Goldman says reduces a historical source of earnings volatility. The bank expects improved conversion in Hainan and healthier Western travel retail operations to aid future growth.
Profitability improvements are central to Goldman’s view of the recovery. The firm cited an expanded Profit Recovery and Growth Plan that it believes will support roughly 450 basis points of EBIT margin expansion through fiscal 2029. Management has increased the target for annual cost savings to $1.0 billion to $1.2 billion and widened planned workforce reductions to as many as 10,000 positions, steps the bank expects to underpin margin gains.
Goldman did not ignore downside scenarios. The brokerage explicitly noted risks that could impede the recovery, including slower-than-expected market share gains, weaker consumer demand, geopolitical disruption in the Middle East and execution challenges tied to the transformation program. Despite those risks, Goldman judged the stock’s valuation to be appealing relative to historical norms and concluded that current pricing does not fully reflect the company’s improving trajectory on growth and margins.
Implications for markets and sectors - The brokerage’s note touches on several areas of market impact: consumer discretionary and luxury/beauty sectors as direct beneficiaries of share gains and category growth; retailers and travel-focused retail operations as channels where conversion and consumer flows influence results; and cost-structure improvements that affect corporate profitability metrics more broadly.