Estee Lauder (EL) is benefiting from its restructuring and "Beauty Reimagined" strategy, with improving execution and early Q2 momentum in China, RBC Capital Markets said in a note Friday.

Estee Lauder posted a "solid" quarter of results, RBC said, with Q1 adjusted EPS of $0.32, beating consensus of $0.18, while revenue came in at $3.48 billion, above the $3.38 billion estimate.

The company said it is witnessing positive early signs in China for Q2, with solid momentum during the Golden Week period and recovering air traffic boosting demand, RBC noted.

The company maintained its full-year outlook, guiding for adjusted EPS of $1.90 to $2.10 and organic sales growth of 0% to 3%. Though, questions may arise why guidance was not raised, the analysts cited this is a prudent move by the management team to give themselves flexibility amid dynamic beauty and geopolitical environment.

RBC said it raised its fiscal 2026 EPS estimate for the company to $2.10 from $2.03 and bumped its organic sales growth forecast to 2.7% from 1.9%, reflecting Q1 strength.

RBC noted that retail sales in China rose by double digits, outpacing the local beauty market, while US and European travel retail segments also showed momentum.

The firm maintained its Outperform rating and raised its price target to $113 from $107.

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