Raymond James upgraded e.l.f. Beauty, Inc. (NYSE:ELF) to Strong Buy from Outperform in a note Monday, also adding it to their "Analyst Current Favorites List."
The firm lowered its price target on the stock to $140 from $145 per share, stating they believe the sell-off in the stock is overdone, with shares down 27% since their summer peak.
"ELF now trades at a 25x EV/EBITDA multiple on our CY24 estimates, a premium to Beauty peers but a 13% discount to a group of high-growth Consumer names including CELH, LULU, CMG, and WING," noted the analysts at Raymond James.
"ELF can sustain momentum well ahead of peers in our view due to its robust pace of innovation, much of it in new categories and therefore minimizing cannibalization, differentiated marketing that has been more effective than peers, and accessible price points, a particularly attractive trait if consumer's financial health deteriorates," they added.
The analysts also said decelerating retail sales growth is well known, but the firm believes non-tracked channels are growing at a faster pace. In addition, Raymond James believes ELF's white space opportunities across categories, geographies, and retailers "should continue to support growth well above Beauty average, justifying a premium valuation to peers."