Estée Lauder
stock gave back its early morning gains in Monday’s afternoon trading session, after CNBC disputed reports that billionaire Nelson Peltz was considering mounting a shareholder campaign against the cosmetics giant.
The New York Post reported that Peltz, the founder of investment management firm Trian Fund Management, was gearing up to launch an activist campaign that seeks to oust
Estée Lauder
(ticker: EL) CEO Fabrizio Freda and push for a potential turnaround and sale of the company, citing sources close to the situation.
Shares rallied behind the potential of an activist campaign, gaining as much as 5% in premarket trading. Later on Monday, however, the stock lost its premarket gains after CNBC’s Jim Cramer disputed the report, citing Peltz himself. Peltz has no intention of pursuing a shake-up in part because the company’s share structure gives the Lauder family outsize control, Cramer said on CNBC Investing Club.
A Trian spokeswoman said it doesn’t comment on market rumors. Estée Lauder didn’t immediately respond to a request for comment.
Earlier this year, Peltz had
Walt Disney
in his line of fire. Within roughly a month of Peltz’s campaign becoming public, Disney announced $5.5 billion in cost reductions and plans to reinstate its dividend—a resounding victory for the activist investor.
Estée Lauder stock was up 1% to $205.81 on Monday. The shares have shed 17% this year, nosediving following Estée Lauder’s most recent earnings report, in which the company cut guidance—citing an uncertain postpandemic recovery in Asia. Following the Post’s report, some analysts voiced optimism that Peltz’s involvement could give the stock a boost. Others pointed out that the Lauder family—which controls 84% of the voting power and four out of the 17 board sets—could make it hard for an activist investor to have a substantive impact.
“It’s pretty simple: without the Lauders, nothing substantive (like a sale) is possible,” wrote Wells Fargo analyst Christ Carey in a research note. Carey has an Overweight rating and $225 price target. Estée Lauder stock was up 1% to $205.81 on Monday.
Estée Lauder was a 2022 Barron’s stock pick.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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