Upside At EL On Better Prestige Trends; ULTA's Valuation Looks Attractive

Research evidence excerpt

Upside At EL On Better Prestige Trends; ULTA's Valuation Looks Attractive

TD SECURITIES (USA) LLC INDUSTRY UPDATE

July 21, 2026

■Retailing/Specialty Stores: Beauty Upside At EL On Better Prestige Trends;

ULTA's Valuation Looks Attractive

Oliver Chen, CFA THE TD COWEN INSIGHT

646 562 1424

Positive on EL Setup & ULTA Looks Inexpensive; Cautious on ELF Into The Print. We model the

oliver.chen@tdsecurities.com

most upside at EL driven by: 1) improving China trends; 2) sustained US momentum; 3) FY27

Julia Shelanski guidance sets up guardrails; 4) positive luxury readthroughs. Ulta screens inexpensive at 15x

646 562 1459 FY2 P/E, but faces challenging comps; while ELF's recent rally (+40% since 4Q26) keeps us

julia.shelanski@tdsecurities.com

more cautious near-term.

Jonna Kim, CFA

646 562 1419 We Believe Beauty Trends Remain Mixed in 2Q26 - Fragrance Continues to Outperform

jonna.kim@tdsecurities.com While Overall Participation Softens: (1) modestly softer beauty engagement per TD Cowen's

Gabriella Garr proprietary survey data, w/ the percentage of consumers not purchasing any beauty or

646 562 1356 personal care products increasing to ~27% in 2Q26 (+2pts y/y), while skincare & haircare

gabriella.garr@tdsecurities.com purchase rates declined ~5pts y/y; (2) continued channel share gains at Amazon (+3.8pts y/y),

while broadlines & drug stores lost share & Sephora continued to outpace ULTA on a growth

Price Target Changes basis; & (3) fragrance remained the standout category, w/ engagement increasing ~6pts y/y

EL $90.00 (Prior $85.00) to 28%, while L'Oréal surpassed e.l.f. as the most purchased mass beauty brand among those

ELF $85.00 (Prior $65.00)

tracked in our survey.

EL: Positive 4Q26 Setup as Easier China & Travel Retail Compares Support Upside;