Ulta, e.l.f, Estée Lauder: The best and worst beauty players
B. Riley Securities senior analyst Anna Glaessgen joins Market Domination to discuss the state of the beauty industry and lays out some of her top picks. Glaessgen has a Sell rating on Ulta Beauty (ULTA), noting that the company is facing several external headwinds: "You've seen massive expansion of distribution in the category with the Sephora and Kohl's (KSS) partnership, and you're also seeing a deceleration. Makeup and beauty performed really well out of COVID, much beyond what most people expected. And so now you're seeing a natural deceleration." She notes that these headwinds may not be fully accounted for in the stock price, which influenced her Sell rating. While the economy slows, she explains that beauty companies have been "really well-valued within the consumer space." She highlights the sector's resilient growth, and with younger generations showing increased interest in makeup and skincare, she sees e.l.f Beauty (ELF) in a position to benefit. Glaessgen says that the company has had "phenomenal growth over the past few years," despite currently experiencing a bit of a deceleration. After growing 80% in 2023, she believes e.l.f. is naturally coming off its highs and highlights that the company still expects double-digit growth in the second half of 2024. She also points to e.l.f.'s successful marketing strategy as it has a strong social media presence and knows how to leverage the influencer economy. Meanwhile, Glaessgen is bearish on Estée Lauder (EL), explaining that while it has found success in the Asia-Pacific market, it is experiencing issues in the domestic market. She also notes that its earnings estimates have "come down pretty meaningfully over the past year," and says that it is too early to view it as a buy-the-dip opportunity. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl
