12:13 PM EDT, 08/15/2024 (MT Newswires) -- Estee Lauder ( EL ) is likely to meet fiscal Q4 expectations, with potential for upside as Asia travel retail has returned to double-digit growth, RBC Capital Markets said in a note Thursday.

The brokerage said Estee Lauder ( EL ) has already incorporated into its guidance the soft consumer demand in China and the muted expectations for the June 18 shopping day. The stock's recent weakness may be traced to investors "double counting negative news" on China, RBC added.

Assuming China accounts for about 20% of sales, Estee Lauder's ( EL ) sales guidance cut for fiscal 2024 implied a decline of 20% to 30% in mainland China for fiscal Q4, RBC said in the note. Other factors cited for the guidance cut were macroeconomic challenges and geopolitical volatility in some parts of the world.

Estee Lauder ( EL ) lowered its 2024 net sales outlook to a decline of 2% to 3% and its organic sales guidance to a decrease of 1% to 2%, both from prior growth outlook of -1% to +1%. The company is scheduled to report its fiscal Q4 and full-year earnings on Monday.

RBC noted that despite widespread industry concerns over Chinese market trends, Estee Lauder's ( EL ) recent results and strategic shifts in travel retail and other regions support a positive risk-reward scenario.

RBC maintained an outperform rating on the company with a $131 price target.

Estee Lauder ( EL ) shares rose about 4.5% in recent trading.

Price: 95.71, Change: +4.08, Percent Change: +4.45