Key Stats for ELF Stock
- 1-day Price Change for ELF stock: 9.7%
- Current Share Price: $112
- 52-Week High: $172
- ELF Stock Price Target: $134
What Happened?
E.l.f. Beauty (ELF) stock surged more than 9% on Monday following an upgrade from Morgan Stanley, which raised its rating to Overweight from Equal-weight and argued that consensus earnings estimates are “way too low.”
The ELF stock upgrade comes after the cosmetics company reported mixed first-quarter results that showed profits decline by 20% due to new tariffs on Chinese imports, despite meeting revenue expectations.
In the June quarter, E.l.f.’s net income dropped to $0.89 per share from $1.10 per share a year ago, as the company, which sources about 75% of its products from China, faces tariffs as high as 55% on Chinese imports.
However, ELF beat Wall Street earnings estimates of $0.84 per share while revenue of $353.7 million was in line with consensus projections.
ELF declined to provide full-year guidance due to tariff uncertainty but expects first-half sales growth above 9% and adjusted EBITDA margins of 20%.
CEO Tarang Amin noted that E.l.f. has raised prices by $1 across its product line to offset tariff costs while maintaining its value proposition, with 75% of products remaining under $10.
See analysts’ growth forecasts and price targets for ELF stock (It’s free!) >>>
What the Market Is Telling Us About ELF Stock
Morgan Stanley’s bullish stance reflects confidence that investor concerns about slowing U.S. sales, price increases, and the recent Rhode acquisition are overblown.
The investment firm argued that fears over demand loss from higher prices are overstated, noting that e.l.f. has historically performed better than modeled on elasticity in past price increases, having taken only three price increases in its 21-year history.
The upgrade highlights the transformative potential of the Rhode acquisition, which closed last week. Rhode, founded by Hailey Bieber, generated $212 million in sales over three years with just 10 products through direct-to-consumer only.
Morgan Stanley sees significant expansion potential as Rhode launches in all Sephora stores across the U.S. and Canada in September, marking the first time the brand will have a physical retail presence.
Despite ELF stock falling about 50% from its peak last year, it continues to demonstrate market dominance with 26 consecutive quarters of sales growth and market share gains, the only brand among nearly 1,000 tracked cosmetics brands to achieve this feat.
The company maintains the #1 unit share position in color cosmetics nationally at approximately 15% share, more than double its position three years ago.
Morgan Stanley’s 2027 adjusted EBITDA estimate for ELF stock sits 18% above Wall Street consensus, reflecting expectations for stronger-than-expected contributions from Rhode, price increase benefits, and solid base business performance despite near-term volatility.
Despite the ongoing volatility, ELF stock has returned over 480% to shareholders in the last five years.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
