Ulta gets a Sell rating, e.l.f. Beauty a Buy at B. Riley

B. Riley initiated coverage of a number of beauty stocks. Analyst Anna Glaessgen gave Ulta Beauty (ULTA) a Sell rating and $300 price target, citing category deceleration and increased competition. Glaessgen issued a Buy rating and $175 price target to e.l.f. Beauty (ELF), writing that the company is a "high-quality growth story" with a "power grip on category growth."

Market Domination anchors Julie Hyman and Josh Lipton discuss the calls in the video above.

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This post was written by Stephanie Mikulich.

Video Transcript

All right, let's talk about another coverage initiation.

This one from B Riley initiating coverage on some beauty stocks, Anna Glas and over there, uh initiating coverage buys on Elf beauty and the honest company a sell on Ulta and it is that sell, that's really um we've been watching today.

The stock has been had sort of a rocky year that is right now.

It's down about 2% here.

The price target on it is $300 per share.

Um and they're looking at the the has been sort of dominant in its category, but they say basically there is some go forward earnings risk that is in part because of competition and in part because of further category deceleration target is 300 per Bloomberg that actually matches the street low.

So to your point, talk about earnings risk, given the competition deceleration, the category growth thinks comp sales will decline through the year end Telstra clients maybe extend to next year too.

We see earnings risk as overshadowing the peal of the relatively low valuation.

Now, the price target on Elf by contrast is 175 here they call it, uh she calls it a high growth uh high quality growth story.

Excuse me, a couple of reasons here, price points attractive elf is at a lower price point and is particularly popular with younger consumers.

So those are a couple of the reasons that she likes e high valuation she says versus pier but toward the low end of recent ranges, there you go.