e.l.f. Beauty, Inc. (NYSE:ELF) was cut to Equal-Weight from Overweight at Morgan Stanley on Monday, with analysts raising the price target to $168 from $137 per share.
Analysts said in the note covering US consumer stocks that "the topline landing is here," and they expect shifting themes within 2024.
The firm's ELF downgrade is based on two factors. Firstly, the valuation now looks like it is pricing in ELF's growth opportunity after a pronounced stock run-up, including a tenfold increase in the stock price since the beginning of 2020, pre-COVID, and a near-tripling since the beginning of 2023.
Secondly, "ELF has much more difficult corporate and US scanner data sales growth comparisons ahead after the soon-to-be-reported FQ3, which may create near-term fundamental and stock price volatility," said the firm.
They also noted the stock's "unfavorable bull/bear skew near-term" and the likely better entry point into what they still view as a very compelling long-term growth story from a fundamental standpoint.