11:23 AM EDT, 05/04/2026 (MT Newswires) -- Estee Lauder's ( EL ) turnaround of its base business is progressing well and the company is seeing sufficient improvement in its organic sales growth to confirm the high end of its previous full-year sales range, Morgan Stanley said in a note emailed Monday with a review of the company's fiscal Q3 results.

Also, the company's Q3 earnings per share upside backed an increase in its 2026 guidance, as well as a strong early 2027 outlook, even amid the pressure caused by the conflict in Iran, the note said.

Morgan Stanley said, however, Estee Lauder's ( EL ) assumption that the prestige beauty business will accelerate in 2027 may be optimistic, adding the company was "incentivized to put its best foot forward ahead of potential equity in a Puig deal."

There are some questions on "whether the execution/cultural risk of a large acquisition is worth the opportunity cost [versus Estee Lauder's ( EL )] base business turnaround despite sizeable potential EPS accretion," the note said.

The investment firm noted Puig is a complex target due to its big size, fragmented brand/geographic exposure, and the cultural risk of combining family-run companies.

"We remain on the sidelines here, waiting to see how strategic discussions play out, and looking for more confidence in sustained" Estee Lauder ( EL ) organic sales growth, the note said.

Morgan Stanley kept its equal-weight rating on Estee Lauder ( EL ) and increased the company's price target to $90 from $85.

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