EL Should I Buy
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Estee Lauder Companies Inc (EL) is not a strong buy at the moment for a beginner investor with a long-term strategy. While the stock has shown some positive financial growth in revenue and gross margin, the significant drop in net income and EPS, coupled with insider selling and mixed analyst ratings, suggest caution. The technical indicators and options data also do not present a compelling case for immediate entry.
The MACD is negative and contracting, RSI is neutral at 47.868, and moving averages are converging, indicating no clear trend. Key support and resistance levels suggest the stock is trading near its pivot at $106.754, with resistance at $118.529 and support at $94.979. Overall, the technicals do not indicate a strong buy signal.
Gross margin improved slightly to 76.5%. Analysts from Citi and JPMorgan view the recent selloff as a buying opportunity, citing improved fundamentals and the company's 'Beauty Reimagined' strategy.
Insider selling has surged by 38210.71% over the last month. Multiple analysts have downgraded the stock or lowered price targets due to concerns about elevated expectations, tougher comparables in China, and muted growth visibility. Legal issues, such as the lawsuit against Walmart, could impact brand reputation.
In Q2 2026, Estee Lauder's revenue grew by 5.62% YoY to $4.229 billion, and gross margin increased slightly to 76.5%. However, net income dropped significantly by -127.46% YoY to $162 million, and EPS fell by -126.83% YoY to $0.44, indicating profitability challenges.
Analyst sentiment is mixed. While some firms like Citi and JPMorgan see the recent selloff as a buying opportunity, others like HSBC and TD Cowen have downgraded or lowered price targets due to concerns about growth visibility and elevated expectations. Current price targets range from $94 to $140, with a median around $106.
