Estee Lauder's (EL) turnaround appears to be gaining momentum as key brands perform better and demand from luxury consumers remains resilient, RBC Capital Markets said in a report Thursday.

Circana data showed the company gaining both dollar and volume share on a two-year average basis, while Numerator data also indicated "healthy performance" across the company's beauty categories, according to the report.

The firm said travel-retail trends remain uneven but are showing "signs of stabilization," particularly in China's Hainan province. However, weaker duty-free sales in South Korea and disruptions tied to changes in airport retail operators could create near-term pressure, the report said.

The Middle East remains a wildcard because the company's fiscal 2027 outlook assumes no major disruptions from regional conflict, RBC said. The firm said Estee Lauder may prudently begin the year near the lower end of its forecast for 3% to 5% sales growth and a 12.5% to 13% adjusted operating margin, according to the report.

RBC reiterated an outperform rating on Estee Lauder with a price target of $111.

Price: 79.67, Change: -2.96, Percent Change: -3.58