Estée Lauder (EL) reported earnings on 8/20/2020 before the open. The company reported an adjusted loss of 50c, which missed consensus forecasts of a 19c loss. Revenue came in at $2.43B, which also missed estimates of $2.45B. For the new quarter, the company expects sales to decline by 12-13% year-over-year. EL plans to cut between 1,500 and 2,000 jobs globally, which amounts to about 3% of its workforce. EL also plans to close about 10-15% of its freestanding stores. CEO, Fabrizio Freda, said that the company enters fiscal 2021 with cautious optimism and went on to note that he expects sales trends to improve sequentially each quarter. Freda also said “the balance between online and brick-and-mortar is going to change forever” in a post-COVID world and that the company is moving to close under-performing locations and refocus on digital and other areas that are outperforming.


The stock got a notable upgrade from neutral to buy at D.A. Davidson. D.A. Davidson raised their price target from $183 to $231. The analyst noted that EL posted year-over-year sales growth in July and therefore believes that the forecasted decline in sales of 12-13% is very conservative. EL sold off as much as 8.6% on Thursday before closing down 6.7%. On Friday at 2:45 PM ET, the stock is up 4.4% to $207. Let’s review our weekly cycle analysis.

Estée Lauder (EL) Weekly Chart – annotations by

At we use technical analysis to evaluate price charts of stocks, futures, and ETF’s. We use a combination of cycle, trend and momentum chart studies, on multiple timeframes, to present a “sum of the evidence” directional outlook in time and price. Technical Briefing: The weekly cycle analysis suggests that EL is in the late stages of a declining phase and due to form an intermediate-term low. The next intermediate-term low is due to form between 7/27 – 8/31. Weekly momentum is positive.

On the upside, there is a Fibonacci extension zone from 226.18 – 237.85. On the downside, there are intermediate-term supports from 194.76 – 180.81. For the bears to regain control of the intermediate-term, we would need to see a weekly close below 167.69. Sum of the Evidence: EL is in the late-stages of a declining phase and remains in a longer-term very positive cycle pattern. The stock is due to bottom around the end of August. Once the stock forms the next intermediate-term low, we see a likelihood that the stock rallies up to the Fibonacci extension zone beginning at 226 by the end of the year.

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