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Investing.com -- Beauty stocks are navigating a challenging landscape of tariff-driven price increases and shifting consumer behaviors, yet certain companies continue to show resilience and growth potential.
The beauty industry is facing several key challenges including questions about demand elasticity, trade-down risk, and category durability as consumers become increasingly price-conscious.
Data suggests beauty shoppers are comparison shopping more frequently, with 56% cross-checking prices across retailers. Despite these headwinds, Jefferies identifies standout performers that continue to demonstrate strength in this evolving market.
Here’s the top beauty stocks are according to Jefferies:
Elf Beauty- Jefferies maintains a BUY rating on Elf, citing its continued outperformance against peers and significant growth opportunity through international expansion and the Rhode acquisition. Despite investor concerns about demand elasticity following a $1 price increase implemented in August, the company has seen dollar sales accelerate from high single-digit percentages to mid-teens percentages, with improving unit growth since late September. Jefferies remains confident in the health and durability of the Rhode brand, noting its record-breaking sales at Sephora. The firm’s bullish stance is based on expectations for continued market share gains, expanded distribution, international rollouts, and portfolio diversification through M&A, with management setting achievable guidance.
In recent developments, e.l.f. Beauty disclosed in a regulatory filing that its rhode brand generated $212 million in annual sales for the fiscal year ending March 2025. Following the brand’s strong performance, Morgan Stanley raised its price target on the company, while both TD Cowen and Piper Sandler reiterated positive ratings.
Inter Parfums - Jefferies maintains a BUY rating on Inter Parfums, highlighting that the stock is trading at approximately 30% discount to its 5-year average EV/EBITDA multiple. Analysts believe potential guidance reductions for the fiscal year are already priced in. Jefferies expects growth in line with the fragrance category (mid-single digits) and sees opportunities to gain new licenses. The global prestige fragrance industry has shown strength, growing at mid-single digits versus historical low-single digits. The firm notes that the fragrance market’s health is improving as choice counts narrow and peripheral SKUs are removed, while cash flexibility positions the company well for potential license acquisitions amid industry consolidation.
Inter Parfums reported its second-quarter 2025 results, with both revenue and earnings per share falling short of analyst expectations. The company posted revenue of $334 million and an EPS of $0.99 for the quarter.
While beauty sales increased by double digits year-over-year during Fall Prime Day, this growth was significantly lower than the triple-digit growth seen in July’s Prime Day, suggesting consumers may be pulling back spending as price increases and full tariff impacts take hold. Despite these challenges, Jefferies sees continued consumer enthusiasm for beauty products, though spending may increasingly concentrate around promotional events.
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