Estee Lauder Companies, Inc. (EL) Stock Moves Down and Here’s Why

Estee Lauder Companies, Inc. (NYSE: EL) shares fell on Tuesday February 7 on lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

U.S. stocks were up in early trade on Tuesday which could put the equity market on track to set new records.

Investors were focusing on earnings, with GM and Michael Kors making moves after reporting early.

S&P 500 futures ESH7, +0.31% rose 7 points, or 0.3%, to 2,293.50, while Dow Jones Industrial Average futures YMH7, +0.46% tacked on 70 points, or 0.4%, to 20,042. Nasdaq-100 futures NQH7, +0.48% added 14 points, or 0.3%, to 5,171.75.

Analysts at Zacks Investment Research downgraded shares of Estee Lauder Companies, Inc. (NYSE: EL) from Hold to Sell in a research note to investors today. With a rating of Sell on the stock, the company has a 52-week high of $97.48. The one-year price target of $90.00 is higher than the opening price of $83.18, causing a number of other analysts to issue statements on the company recently. Downgrades happen when analysts believe that the future prospects for the security have dropped from the initial recommendation, often because of an important and major change in the company’s actions, future outlook or industry.

Shares of Estee Lauder Companies, Inc. (NYSE: EL) opened at $83.18 yesterday and traded in a range between, $82.49 and $83.27, and last traded at $82.64, which is a drop of $0.18 over the previous closing price.

Estee Lauder Companies, Inc. (NYSE: EL) now has a market cap of 30.28B.

Estee Lauder Companies, Inc. (NYSE: EL) Average Daily Trading Volume

312,378 shares crossed the trading desk yesterday, 81 percent lower than the average, out of a total float 218,762,000. lower than normal. Look for trading volume to pick up in the coming days as swing traders often use increases in trading volume to identify heavy volume accumulation or distribution by institutional investors.

While increased trading for one day will not mean much, conversely, a trend of heavy trading volume on the buy side over a period of days or weeks sends a positive signal to market traders that institutions may be moving in, so institutional sponsorship is very important.

Institutional sponsorship simply refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions.

These professional investors retain substantial teams of analysts researching thousands of stocks, so it is good corroboration to see them taking a postion in a stock you’re researching.

Estee Lauder Companies, Inc. (NYSE: EL) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By tracking the activity of these professional investors—and the moving averages they affect—it allows for traders to make more effective decisions on trades.

Trades for Estee Lauder Companies, Inc. (NYSE: EL) have ranged from $75.29 – 97.48, and the stock now has a 50-day MA of $79.30 and 200-day MA of $84.48. Today’s last price is 15.22%% under the 52 week high of $97.48.

Earnings growth is an important factor to look at when buying stocks and investors identify companies that have increased their earnings by at least 25% for the past 3 years.

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