Ahead of the Bell: Goldman cuts Estee Lauder

Goldman Sachs analyst Andrew Sawyer said weakness at U.S. department stores has accelerated, while wealth in emerging markets is declining. Estee Lauder sells products in more than 140 countries including emerging markets such as Russia, Eastern Europe, China, Latin America and the Middle East.

Sawyer cut his rating on the stock to "Sell" from "Neutral" and said the company's exposure to discretionary spending is high, which may weigh on earnings and sales in the near-term.

The company forecast a "more realistic" outlook for fiscal 2009 several weeks ago, "but conditions have deteriorated further," Sawyer said.

In October, Estee Lauder lowered its sales forecast to between 3 percent and 5 percent, below its previous expectations for sales growth of 6 percent to 8 percent. The new forecast implies fiscal 2009 revenue of $8.15 billion to $8.31 billion.

Analysts expect sales of $7.79 billion.

Sawyer trimmed his price target by $9 to $31, implying shares could fall 3 percent from Thursday's closing price of $31.83.