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Investing.com -- Piper Sandler started coverage of elf Beauty and Ulta Beauty with Overweight ratings, saying signs of stabilization in the beauty category, easing comparisons, and new product catalysts should support growth at both companies.
The brokerage set a $150 price target on e.l.f., citing a pipeline of innovation, higher pricing, and the contribution of Rhode, the skincare brand launching this week at Sephora stores across the U.S. and Canada.
Piper estimated Rhode could generate about $30 million in Sephora sales in its first year, with further upside internationally given its social media following.
The analysts also said e.l.f. could continue to capture share in color cosmetics as CoverGirl-owner Coty scales back investment.
Piper initiated Ulta with a $590 price target, pointing to early results from new CEO Kecia Steelman’s “Beauty Unleashed” turnaround plan.
The strategy, focused on more exclusive launches and in-store events, is beginning to lift traffic and conversion at stores and online.
Competitive headwinds from Sephora shop-in-shops appear to be easing, with prestige makeup and skincare returning to growth in the first half of 2025, the note said.
The bank said Ulta’s second-half guidance looked conservative given a stronger brand pipeline and easing transaction comparisons.
Over the longer term, cost optimization and improved promotional discipline could restore margins closer to historical highs, while Space NK provides another growth vehicle.
Piper said it expects both e.l.f. and Ulta to deliver earnings upside and potential multiple expansion as category trends improve and execution strengthens.