Analyst: Retail Stock Sports Favorable Setup

The shares of Estee Lauder Companies Inc (NYSE:EL) are 0.9% higher to trade at $153.41 this morning, after Citi upgraded the luxury retailer to to "buy" from "neutral." While also hiking its price target by $15 to $175, the analyst in coverage cited normalizing channel inventories and financials.

Over the last 12 months, Estee Lauder stock is down 37.3%, but is now up 6% in 2024, slightly underperforming the SPDR S&P 500 ETF Trust's (SPY) 8.8% gain. Stuck in a tight trading range since February, the shares are once more testing their overhead 200-day moving average. 

Coming into today, the majority of covering analysts were neutral; 15 of 25 brokerages rated EL a tepid "hold," leaving room for more bull notes. Puts were growing in popularity, too, with the equity's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranking higher than 74% of annual readings.

Speculating with options looks like the right route to go, too. This is per EL's Schaeffer's Volatility Index (SVI) of 32% that ranks higher than 20% of annual readings, which implies options traders are pricing in low volatility expectations. The security tends to outperform volatility expectations, too, per its Schaeffer's Volatility Scorecard (SVS) tally of 99 out of 100.