The Estee Lauder Cos (EL): Momentum Continues to Build Across Products & Geographies; Model Update Post F1Q27

The continued momentum in sales and margins seen in Estee Lauder F1Q27 print should rebuild investor confidence in the company's ability to regain volume share in the U.S. (+4% Americas OSG) and compound above market growth in China leading to +9% OSG in Mainland China (seventh consecutive quarter of market share gains in the country). The combination of solid top and bottom line delivery early in the year led to the upward guidance revision, which we believe was not consensus. We think the stock was a crowded long into earnings, which together with the bullish expectations into the 4-day analyst day in mainland China and Hainan led to some profit taking today, which we believe presents a buying opportunity. We have updated our organic sales growth, operating margin and adjusted EPS in FY27 to +5.4%, 13.7% and $3.45 from +4.4%, 13.4% and $3.35. We are raising our December-27 price target to $120 from $115 based on beauty peers' 5-year average P/E of 26.9x applied to the calendar year 2