On Monday, DA Davidson maintained a positive stance on e.l.f. Beauty (NYSE:ELF), reiterating a Buy rating and a $220.00 price target for the company's shares.
The endorsement comes as part of the firm's Best-of-Breed Bison initiative, which highlights companies with enduring market advantages and robust financial metrics.
e.l.f. Beauty has been recognized for its exceptional profitability, with a gross margin surpassing 70%, an EBITDA margin over 20%, and a return on invested capital (ROIC) exceeding 25% for the last two fiscal years. According to DA Davidson's analysis, these figures place ELF among the top consumer product companies in terms of financial performance.
The current market price of e.l.f. Beauty's shares represents a 31% discount when compared to the firm's calculated intrinsic value of $265 per share. This valuation is derived from a discounted cash flow (DCF) analysis. The $220 price target set by DA Davidson is based on a multiple of 38 times the company's projected calendar year 2025 EBITDA of $326 million.
Furthermore, e.l.f. Beauty's forward price-to-earnings (P/E) ratio for calendar year 2025 is estimated at 49 times, which is slightly higher than the midpoint of its three-year historical range between 25 and 61 times.
InvestingPro Insights
InvestingPro data highlights e.l.f. Beauty's strong market position with a significant market capitalization of $10.46 billion. The company's impressive revenue growth over the last twelve months, standing at 76.89%, underscores its dynamic business model and market demand for its products. Moreover, e.l.f. Beauty boasts a robust gross profit margin of 70.72%, aligning with DA Davidson's recognition of the company's exceptional profitability.
From an investment standpoint, e.l.f. Beauty's stock exhibits a high earnings multiple, with a P/E ratio of 79.51, suggesting investor confidence in its future earnings potential. Additionally, the company's PEG ratio of 0.83 indicates that its earnings growth may justify the higher P/E ratio. InvestingPro Tips also reveal that analysts predict the company will be profitable this year, which is consistent with the positive outlook presented by DA Davidson. Investors may find additional insights and tips, including 12 more InvestingPro Tips on e.l.f. Beauty's performance and outlook, by visiting https://www.investing.com/pro/ELF. To gain access to these valuable insights, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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