Estee Lauder stock price forms a bearish flag ahead of earnings

Estee Lauder (NYSE: EL) stock price will be in the spotlight on Wednesday after the embattled company publishes its financial results. The shares were trading at $146.80 on Tuesday, where it has been in the past few days. While the stock has soared by over 45% from its lowest point in December, it remains about 60% below its highest point in 2021.

Estee Lauder earnings ahead 

Estee Lauder, the parent company of Bobbi Brown, Bumble and Bumble, Clinique, and Jo Malone, will be in the spotlight on Wednesday. These will be important because they will provide more information about its turnaround strategy.

The most recent financial results showed that net sales dropped by 7% in the fourth quarter while organic sales fell by 8%. Net sales dropped from $4.6 billion in Q4’22 to $4.27 billion in Q4’23

Its fragrance division was flat while its skin care, makeup, and hair care revenue dropped by 10%, 8%, and 5%, respectively. The company also decided to lower its annual revenue and diluted EPS range. 

According to Yahoo Finance, analysts expect that Estee Lauder’s revenue for the first quarter came in at $3.9 billion, an increase from the $3.7 billion it made in the same quarter in 2023. 

Estee Lauder’s revenue for the second quarter is expected to rise to $4.09 billion. For the year, they expect that its revenue will be $15.8 billion followed by $17.15 billion in 2023 as its growth continues.

Analysts are generally bullish on Estee Lauder as the management continues to implement a turnaround strategy. Barclays has an equal-weight rating on the stock while Telsey has a market perform rating. 

DA Davidson and Oppenheimer have a buy rating. The average target for the stock is $161, up from the current $146.

Estee Lauder stock price forecast

EL chart by TradingView 

Turning to the weekly chart, we see that the EL share price has been in a slow comeback in the past few months. Recently, however, it has struggled to move above the crucial resistance point at $160. 

The stock formed a death cross in June last year as the 200-week and 50-week Exponential Moving Averages (EMA) formed a bearish crossover. In most cases, this pattern is usually a bearish sign. 

Most importantly, the stock has formed a bearish flag pattern that is shown in red. Therefore, while it is always difficult to predict how a stock will perform after earnings, there is a likelihood that it will retreat on Wednesday. If this happens, the next point to watch will be at $132, its lowest point in March 2020.