Estee Lauder: Citigroup Downgrades to Neutral, Citing Margin Pressures

Citigroup Lowers Rating, Citing Margin Pressures

In a recent research note, Citigroup downgraded Estee Lauder Companies Inc. (EL) to "Neutral" from "Buy", citing margin pressures.

Rising Costs and Supply Chain Issues Weigh on Margins

The analyst team at Citigroup noted that Estee Lauder has been facing rising costs for raw materials and packaging, as well as ongoing supply chain disruptions.

These factors have weighed on the company's margins, leading to a decline in profitability.

Macroeconomic Headwinds Add to Challenges

Citigroup also cited macroeconomic headwinds, such as inflation and a potential recession, as factors that could further impact Estee Lauder's business.

The analyst team believes that these challenges will make it difficult for the company to sustain its current growth trajectory.

Maintain Neutral Stance

Based on these factors, Citigroup downgraded its rating on Estee Lauder to "Neutral".

The analyst team believes that the company's shares are fairly valued at current levels and does not see a compelling reason to recommend buying or selling the stock.

Market Reaction

The market reacted negatively to the news, with Estee Lauder's shares falling by 2% in pre-market trading.

The downgrade from Citigroup adds to concerns about the company's future prospects, as it is the second major brokerage firm to lower its rating on the stock in recent weeks.