A slew of Wall Street analysts have downgraded Estée Lauder Cos. ahead of the beauty company’s quarterly earnings report, citing concerns around a prolonged recovery in its key China market.

Citi was the latest firm to walk away from its bullish rating, lowering Estée Lauder to neutral on Tuesday as analyst Filippo Falorni called the company’s recovery path “more uncertain” given weak signals from China and disruption from a recent cyber attack. Four firms have cut Estée Lauder in the past two weeks, sending its consensus rating to the lowest in almost three years.

Estée Lauder shares fell as much as 2.5 percent on Tuesday. The stock has tumbled 29 percent this year, underperforming beauty peers including L’Oréal SA and Coty Inc., and the S&P 500 Consumer Staples Index, all of which have advanced since the start of the year.

The owner of the Clinique, The Ordinary and Le Labo brands has been grappling with weakness in Asia for months amid a slower-than-expected return to travel shopping. In May, Estée Lauder suffered its worst share-price drop on record after cutting its forecast for the third time in six months because of continued softness in China. The company typically generates around one-third of its revenue in China.

Channel checks from Citi’s China consumer team have found that Chinese shoppers continue to trade down from premium to mass-market brands, and Estée Lauder’s inventories in some travel retail locations remain elevated. Falorni added that peer L’Oréal recently called out deteriorating trends in the popular travel destination Hainan.

Meanwhile, Estée Lauder disclosed last month that it was the target of a cybersecurity attack, which Falorni said “could further compound” an already tough situation for the company.

Other Downgrades

Barclays, Piper Sandler and Jefferies have also lowered their ratings on Estée Lauder in recent weeks. The stock now has 20 buys, 13 holds and one sell among analysts tracked by Bloomberg, and an average price target that implies a return potential of roughly 27 percent over the next 12 months.

Estée Lauder will report fiscal fourth-quarter earnings on Aug. 18. Citi’s Falorni says Wall Street is already bracing for lacklustre fiscal 2024 guidance from the company, but he worries that continuing weakness in results may cause investors to question the earnings power of the business into fiscal 2025.

While investors are focused on headwinds related to China and travel retail, Jefferies said they’re underestimating pressures in the US. Analyst Ashley Helgans wrote last week that Estée Lauder’s prestige makeup brands are losing market share in the US, and increased brand investment will be needed to drive sales and customer retention.

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The Estée Lauder Companies Targeted by Worldwide Cybersecurity Breach

Employees at The Estée Lauder Companies offices around the world remain locked out of their email and other key functions after a third party gained access to some of the beauty conglomerate’s IT systems, according to people familiar with the situation.