RBC Capital analyst Nik Modi upgraded Estee Lauder to Outperform from Sector Perform with a $131 price target. The analyst believes the company’s earnings and investor sentiment have troughed and that the stock’s risk-to-reward profile skews favorable. Estee’s sales will likely grow slower than RBC originally modeled, mainly due to lower assumed growth rates in China, but its margin opportunity is “very tangible and has additional room to grow,” the analyst tells investors in a research note. Even with “conservative” sales growth and margin expansion estimates, the firm arrives at a fair value price target of $131.
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