BofA raises e.l.f. Beauty stock target to $113 on Rhode acquisition

On Thursday, BofA Securities updated its outlook on e.l.f. Beauty (NYSE:ELF), increasing the price target to $113 from the previous $95, while retaining a Buy rating on the shares. The adjustment follows the company’s strategic move to acquire the skincare brand Rhode. Currently trading at $90.50, InvestingPro analysis suggests the stock is slightly undervalued, with analyst targets ranging from $70 to $120.

BofA Securities analysts highlighted several key factors that underpin their positive stance on the acquisition. They noted that Rhode’s direct-to-consumer (DTC) model presents significant distribution opportunities for e.l.f. Beauty, particularly with Rhode’s upcoming launch in Sephora stores across the United States and Canada in the fall, and in the United Kingdom (TADAWUL:4280) by the end of the year.

The analysts also emphasized that Rhode is anticipated to contribute positively to e.l.f. Beauty’s gross margin, EBITDA margin, and earnings. This is expected to provide the company with additional financial flexibility to ramp up investments in marketing efforts. The company already boasts impressive gross profit margins of 71.11% and has demonstrated strong revenue growth of 46.27% over the last twelve months.

Moreover, the acquisition of Rhode is seen as a strategic move to strengthen e.l.f. Beauty’s appeal to Generation Z consumers, a demographic that is increasingly interested in prestige-level products. With a market capitalization of $5.1 billion and an overall financial health score of "GREAT" according to InvestingPro, which offers 16 additional exclusive insights about ELF’s performance and valuation, the company appears well-positioned for this strategic expansion. Rhode’s product lineup, which includes items ranging in price from $18 to $38, is positioned above e.l.f.’s average price point of $6.50 and that of mass-market peers, which typically sell products around $9.50.

The transaction is slated for completion by the end of e.l.f. Beauty’s second fiscal quarter. The analysts’ optimism reflects the potential for Rhode to enhance e.l.f. Beauty’s market position by expanding its product offerings and reaching new consumer segments. For a deeper understanding of e.l.f. Beauty’s growth trajectory and comprehensive analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro.

In other recent news, e.l.f. Beauty reported fiscal fourth-quarter earnings that exceeded expectations, with earnings per share (EPS) reaching $0.78, surpassing the forecast of $0.73. The company’s revenue also outperformed projections, totaling $332.6 million against an anticipated $327.99 million. Goldman Sachs maintained its Buy rating on e.l.f. Beauty, holding a price target of $120, following the company’s announcement of a $1 billion acquisition of the prestige beauty brand Rhode, founded by Hailey Bieber. This acquisition is seen as a strategic move to expand e.l.f. Beauty’s presence in the skincare segment and diversify its consumer base.

Raymond (NSE:RYMD) James also expressed confidence in e.l.f. Beauty, raising the stock target to $105 and maintaining a Strong Buy rating. The firm noted the company’s strong market share gains and international expansion, despite challenges posed by elevated tariff rates on imports from China. e.l.f. Beauty’s international sales grew significantly, with a 19% increase year-over-year, and the company plans to enter the Polish market soon. Although e.l.f. Beauty did not provide specific guidance for fiscal year 2026 due to tariff uncertainties, it expects continued international expansion and growth through its recent acquisition and product innovations.

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