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Estee Lauder Shares Decline After Reports

Estée Lauder’s (NYSE:EL) shares initially rose more than 5% in pre-market trading

Reports emerged that activist investor Nelson Peltz was considering a possible shakeup of beauty company Estée Lauder, including the potential removal of CEO Fabrizio Freda. The gains were quickly erased after CNBC’s Jim Cramer stated that the reports were “not true.”

According to the New York Post, Peltz is exploring ways to help the company cut costs and “rejigger Estée Lauder’s brands”. With a possible sale of the company not out of the question; the Lauder family controls the business. Chairman Emeritus Leonard Lauder holding an important role in the company and 84% of voting control.

Stifel analysts believe that Peltz’s involvement could create a “win-win” situation for EL shareholders. Getting the Lauder family on board is “important for managing change and necessary for a sale.” Oppenheimer analysts remain optimistic about the current management team’s ability to drive a positive earnings inflection over time.

Estée Lauder

They also believe that Peltz’s potential involvement could fuel more aggressive. Steps to drive a return to historical profitability and represent a positive for shares. The full sale of the company is less likely due to the Lauder family’s control of the business.

EL shares opened 1.3% higher at the New York open, and the company representing a top pick for Oppenheimer despite being a “show me story for now.”