Ahead of the Bell: Analyst upgrades Estee Lauder

posted: 36 DAYS 13 HOURS AGO

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NEW YORK -An analyst upgraded shares of Estee Lauder Cos. on Monday and said sales are improving, while the cosmetic company's restructuring program is delivering results faster than anticipated.

RBC Capital Markets analyst Jason Gere upgraded the stock to "Sector Perform" from "Underperform" and said the worst seems to finally be behind the company.

Last week, the company said it will post fiscal first-quarter earnings "significantly" higher than it previously anticipated as it rolls out new products and records growth in Asia. Rising customer traffic in its travel retail business is helping as well, the company said.

In August, Estee Lauder forecast first-quarter earnings between 23 cents and 30 cents per share, excluding restructuring charges.

Analysts surveyed by Thomson Reuters, who usually exclude one-time items from their estimates, expect profit of 29 cents per share.

Gere said sales of skin care and makeup products are driving results, but demand for fragrances still remains weak.

Overall, however, Gere said the company is heading in the right direction after cutting costs and doing away with underperforming brands.

"While we are not encouraging investors to buy the stock at current levels, even in the face of raised guidance, we are more encouraged by the potential for better earnings near and long-term," Gere wrote in a client note.

The company is scheduled to release fiscal first-quarter results on Oct. 30.

2009-10-19 09:23:41