Estee Lauder's (EL) turnaround continues to progress and its fiscal 2027 guidance is achievable, RBC Capital Market said in a Thursday note.

The company's fiscal Q4 results showed that its income statement is improving, with revenue and profit margins widening, RBC analysts said. They also noted that operating leverage, gross margin expansion, a streamlined fixed cost base, and profit recovery and growth plan benefits are all enhancing profitability.

Sales in the Americas segment grew from a year ago on an organic basis, which is the first positive print in several quarters, pointing to the impact of Estee Lauder's reinvestment into its brands, innovation, and improving channel mix, the analysts said.

On the negative side, the Middle East war unfavorably affected the company's fiscal Q4 consolidated growth and sales growth in its Europe, the United Kingdom and Ireland, and Emerging Markets division, resulting in a $0.05 impact to adjusted diluted EPS for the quarter, according to the note.

RBC reiterated the company's stock at outperform and increased the price target to $120 from $111.

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