Estee Lauder's (EL) turnaround continues, but headwinds from the Middle East conflict could still weigh on fiscal Q4 results, RBC Capital Markets said in a Monday note.

Estee Lauder reported fiscal Q3 adjusted earnings of $0.91 per diluted share, up from $0.65 a year earlier, as net sales increased to $3.71 billion from $3.55 billion. The company also raised its fiscal 2026 adjusted EPS outlook to between $2.35 and $2.45, from $2.05 to $2.25 previously.

Business disruptions from the Middle East conflict are estimated to have a negative impact of $0.07 to the company's fiscal 2026 EPS and $0.06 dilutive to fiscal Q4 EPS, the investment firm said. RBC noted that Estee Lauder's updated outlook "assumes no deterioration" in the Middle East beyond May, along with current market conditions.

The guidance is still "reasonable" and positions Estee Lauder to hit its targets, RBC added.

RBC Capital Markets has an outperform rating and $111 price target on Estee Lauder.

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