On Monday, Stifel adjusted its outlook on e.l.f. Beauty (NYSE:ELF), increasing the price target to $161 from $151 while maintaining a Hold rating on the stock. The revision comes as e.l.f. Beauty's sales trends show improvement, with the new target representing a 25x multiple of the forecasted fiscal year 2026 EBITDA.
The firm's updated financial projections for e.l.f. Beauty are based on recent sales data, which indicates a potential for the stock's performance to surpass current expectations. Analysts at Stifel suggest that consensus sales estimates for fiscal year 2025 and the first quarter of fiscal year 2025 may be underestimated, with projections showing approximately 9% upside to the anticipated sales for the first quarter.
The enhancement in e.l.f. Beauty's sales growth, both year-over-year and in the two-year compound annual growth rate (CAGR), is attributed to an increase in distribution points. This expansion is likely due to the company securing additional shelf space at Walmart (NYSE:WMT). The growth in sales and distribution is a positive indicator for the company's stock.
Despite the optimistic sales trends, Stifel's Hold rating remains unchanged. This decision reflects a consideration of the company's valuation and a noted decline in U.S. market share for e.l.f. Beauty.
According to Circana scanner data, which includes Amazon (NASDAQ:AMZN) and select offerings at Ulta, the company's market share in color cosmetics and skincare has dropped in the first quarter of fiscal year 2025 compared to the fourth quarter of fiscal year 2024.
Additionally, a deceleration in U.S. mass beauty sales has been observed, which began to accelerate in the second quarter of calendar year 2024. These factors contribute to Stifel's cautious stance on the stock despite the raised price target.
In other recent news, e.l.f. Beauty has been the subject of several significant developments. Baird upgraded the company's stock from Neutral to Outperform, citing strong brand momentum and potential for market share gains.
The company's positive first-quarter checks, distribution expansion, and potential for international growth were highlighted as key factors contributing to this upgrade.
Piper Sandler maintained an Overweight rating on e.l.f. Beauty, emphasizing the company's transition to the Russell 1000 index as a potential enhancement for the stock's liquidity. Canaccord Genuity (TSX:CF) raised its price target for e.l.f. Beauty from $214 to $250, citing robust sales data and expansion plans as key contributors to this decision.
Truist Securities increased its price target for e.l.f. Beauty based on updated sales and adjusted EBITDA forecasts. TD (TSX:TD) Cowen maintained its Buy rating and $190 price target, recognizing the company's exceptional growth potential. DA Davidson added e.l.f. Beauty to its 'Best-of-Breed Bison' list, acknowledging the company's financial strength.
These developments reflect the financial community's confidence in e.l.f. Beauty's continued robust performance and growth. The company's strategic moves and market positioning equip it to navigate potential economic headwinds effectively.
Analysts from various firms believe that the company's ability to attract consumers who may be looking to economize without compromising on quality is a distinct advantage in the current market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.