Estee Lauder Companies Inc EL is likely to witness sustained growth in Chinese consumption, according to Goldman Sachs.

The Estee Lauder Analyst: Jason English upgraded Estee Lauder from Sell to Neutral and raised the price target from $147 to $231.

The Estee Lauder Takeaways: Although Estee Lauder could witness headwinds in the U.S., this weakness is likely to be offset by China’s expansion from 20% of the company’s consumption in 2019 to an estimated 40% in 2021, English said in a Monday upgrade note.

“Since the outbreak of COVID-19, EL’s headwinds in both the U.S. and Europe have intensified, but its business with the Chinese consumer has proven resilient," the analyst said, adding that Chinese sales were higher in the third quarter and returned to pre-coronavirus levels by the fourth. 

"While we believe that much of the local Chinese strength is due to a repatriation of sales from abroad, we nonetheless recognize that underlying demand from Chinese consumers is proving more robust than we would have previously expected."

EL Price Action: Shares of Estee Lauder Companies had declined by 0.46% to $214.75 at the time of publication Tuesday.