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Investing.com - BofA Securities maintained its Buy rating and $135.00 price target on e.l.f. Beauty (NYSE:ELF) following the company’s acquisition of Rhode. According to InvestingPro data, the stock currently trades at $95.64 and appears undervalued based on Fair Value analysis, with impressive gross profit margins of 70.67%.
The firm adjusted its fiscal 2026 sales growth forecast to 25% from 24% previously, citing the closing of the Rhode acquisition and further international expansions for both e.l.f. and Naturium brands. This outlook aligns with the company’s strong track record, as InvestingPro data shows revenue growth of 18.61% in the last twelve months.
BofA Securities also revised its fiscal 2026 adjusted EBITDA estimate to $361 million from $347 million, reflecting the fiscal second quarter beat while accounting for lower EBITDA margins of approximately 17% due to higher tariffs and SG&A expenses related to the Rhode acquisition.
The firm noted that while e.l.f. Beauty’s fiscal second quarter sales estimate now includes Rhode, the company will not benefit from sell-in to Sephora during the quarter, as Rhode’s launch in Sephora U.S. and Canada stores is scheduled for September and was executed prior to the acquisition closing.
BofA Securities’ $135 price objective is based on a discounted cash flow analysis with a 9% weighted average cost of capital and 3% terminal growth rate, implying a 20x calendar year 2026 estimated EV/EBITDA multiple, which the firm considers warranted given e.l.f.’s double-digit top-line growth and continued portfolio diversification across categories, pricing, and customer base.
In other recent news, e.l.f. Beauty reported its first-quarter fiscal 2026 results, highlighting a 9% year-over-year sales growth to $353.7 million. The company’s adjusted earnings per share came in at $0.89, surpassing both Canaccord and Street expectations of $0.84. Despite the strong earnings, Canaccord Genuity lowered its price target on e.l.f. Beauty to $128 from $150 due to concerns over tariffs, while maintaining a Buy rating. Morgan Stanley (NYSE:MS), on the other hand, raised its price target to $114 from $105, maintaining an Equalweight rating, citing the company’s recent Rhode acquisition. The investment firm noted a decline in e.l.f. Beauty’s stock in after-hours trading, attributing it to a lack of clarity during the quarterly conference call and earnings release. The company chose not to issue guidance amid tariff volatility, providing limited details about the acquisition. These developments reflect the mixed reactions from analysts regarding e.l.f. Beauty’s recent performance and strategic moves.
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