Intel stock extends gains after report of possible U.S. government stake
On Friday, Canaccord Genuity adjusted its price target for e.l.f. Beauty (NYSE:ELF) shares, reducing it to $105 from the previous $174, while maintaining a Buy rating on the stock. The revision follows e.l.f. Beauty’s third quarter fiscal 2025 results which showed a sales increase of 31.1%, surpassing both Canaccord’s and the Street’s expectations of 21.4% and 21.9%, respectively. Despite the sales growth, the company’s adjusted earnings per share (EPS) of $0.74 fell short of the anticipated $0.77 by Canaccord and $0.76 by the Street. According to InvestingPro data, the stock has experienced significant pressure, declining over 51% in the past six months, though analysis suggests the stock may be approaching undervalued territory.
The lower profitability seen in the quarter was attributed to increased freight costs and foreign exchange headwinds. Despite these challenges, e.l.f. Beauty maintains impressive gross profit margins of 71% and operates with a healthy current ratio of 1.78, indicating strong liquidity. The company continued to expand its market share during the quarter, but the mass cosmetics category experienced a slowdown, with January particularly showing considerable weakness. The company is also facing challenges as it compares against the previous year’s successful launch of its viral lip oil, and recent product launches have not met expectations. Consequently, the management has revised its guidance for the year, projecting fourth-quarter sales to range between a 1% decline and a 2% rise.
Despite a sluggish start to the fourth quarter in January, Canaccord highlighted e.l.f. Beauty’s ongoing market share gains and the rapid growth of its Naturium brand, which is currently sold in only two brick-and-mortar retailers, Target (NYSE:TGT) and Ulta. The firm expressed optimism about e.l.f. Beauty’s and Naturium’s potential for global expansion and long-term growth.
The reduction in the price target to $105 is based on a 27 times multiple of Canaccord’s fiscal year 2026 EPS estimate. The firm believes that the substantial sell-off in e.l.f. Beauty’s stock presents an attractive entry point, as it implies the stock is trading below 20 times Canaccord’s lowered FY26 EPS estimate. This valuation is considered favorable compared to other beauty industry peers with lower growth profiles, such as L’Oreal and Estee Lauder (NYSE:EL), which trade at around 27 times earnings.
In other recent news, e.l.f. Beauty’s third-quarter sales exceeded expectations with a 31% year-over-year increase, significantly outpacing the projected 22%. However, the company’s fourth-quarter outlook was conservative due to a sluggish January in the beauty industry, leading to the first reduction in its full-year guidance in several years. This adjustment influenced several analysts’ reassessments of the company’s future financial performance. Raymond (NSE:RYMD) James maintained a Strong Buy rating but reduced the price target from $175.00 to $120.00, Goldman Sachs retained its Buy rating while cutting the price target from $165.00 to $142.00, and Piper Sandler maintained an Overweight rating but trimmed the price target to $131 from $167. In contrast, UBS downgraded the stock from Buy to Neutral and significantly reduced the price target to $74.00. Despite the mixed outlook, these recent developments indicate e.l.f. Beauty’s potential for ongoing success in its market segment.
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