Estée Lauder rises after Deutsche Bank upgrades on diversification and margin recovery

Shares of Estée Lauder EL.N rise 2.7% to $77.21 premarket

Brokerage Deutsche Bank upgrades EL to "buy" from "hold" and raises PT to $95 from $71

New PT implies a 26.3% upside to the stock's last close

Brokerage says the cosmetic giant is diversifying well beyond China for future growth, while increasing innovation across different brands and price points

Brokerage believes major investments in EL's supply chain and forecasting systems are mostly complete and that future sales growth will recover profit margins going forward

EL can fund new investments by cutting areas where they previously overspent, says Deutsche Bank

As of last close, EL stock up 0.28% YTD