Citi analysts have upgraded Estée Lauder to a Buy rating, citing the recent post-earnings selloff as a favorable entry point for investors. The brokerage believes the stock's decline presents a buying opportunity, despite a miss in travel retail sales. This adjustment reflects an improved outlook for the company's underlying fundamentals amid strategic shifts.

The downgrade followed investor concerns over weaker-than-expected sales in travel retail, particularly in Asia. Temporary operational transitions in key markets like Shanghai and Beijing, coupled with softer trends in Japan and Korea, contributed to the disappointment. However, Citi sees positive developments since the rollout of “Beauty Reimagined”, CEO Stéphane de La Faverie's strategy.

Citi highlights stronger sales and market share gains in Mainland China, as well as improving duty-free spending in Hainan. They also point to better market share trends in the U.S., where Estée Lauder is expanding into channels like Amazon, Ulta, and TikTok Shop. These factors could support higher sales growth in the second half of fiscal 2026.

Looking ahead, Citi anticipates further margin improvements driven by cost savings from the company's profit recovery plan. The firm foresees a path to earnings exceeding $4 per share by fiscal 2028 as margins recover and revenue stabilizes. Investors should watch Estée Lauder's performance in China and its expansion efforts in the U.S. markets.