Beauty market

Beauty category shows resilience with Ulta, Estee Lauder and Olaplex among top analyst picks

Consumers might cut back on some items due to inflation, but a survey by Cowen analysts shows people plan to stick to their beauty regimen. Cowen surveyed 1,000 respondents and 70% to 75% say they will spend the same amount on beauty products this year compared to last year. Cowen estimates the total addressable market (TAM) for the beauty category at $55 billion. Ulta Beauty Inc. ULTA,
-0.56%
is the first choice of the group of analysts. “We believe Ulta will be less impacted by declining consumer demand and will continue to drive market share gains given the resilience of beauty,” Cowen’s report said. Other top picks include Estee Lauer EL,
-1.99%,
Olaplex OLPX,
-0.31%
and Neutrogena. Raymond James analysts note that Target Corp. TGT,
-0.15%
highlighted the strength of the beauty category in the first quarter despite a revenue shortfall. ELF Beauty Inc. ELF,
-0.05%
is expected to release its fiscal fourth quarter results on Wednesday after the closing bell. The beauty brand has gained shelf space at Ulta, and DA Davidson says ELF could double its shelf space at Walmart Inc. WMT,
+1.36%,
Ulta and Target in the coming years. ELF shares are down 35.2% since the start of the year.