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SMALL BUSINESS
Goldman Sachs adds Estee Lauder to 'Sell' list
AP
NEW YORK -A Goldman Sachs analyst on Monday said Estee Lauder Cos.' shares are overvalued and added the company to its "Conviction Sell" list.
In an effort to battle weak sales, Estee Lauder is in the midst of a four-year restructuring plan that includes cutting 2,000 jobs, or 6 percent of its work force, freezing merit raises and maintaining its hiring freeze.
But Goldman Sachs analyst Andrew Sawyer said investors have sent shares up too much in response to the plan. Since the beginning of July, the stock has risen 9 percent.
Shares now trade about 19 percent higher than Sawyer's $32 price target.
"We believe Estee Lauder has overshot its fundamental value on optimism around the company's restructuring plan and the potential for a return to solid sales growth as the economy recovers," Sawyer wrote in a note to investors.
Sawyer said there are risks to the New York company's realizing its margin goals if the sales recovery is "less robust" than expected or if the company has higher fixed costs than expected.
Estee Lauders shares fell 45 cents to $39.23 during afternoon trading.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
2009-10-12 14:37:36
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