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On Thursday, TD Cowen displayed confidence in e.l.f. Beauty (NYSE: NYSE:ELF) as the firm’s analyst, Oliver Chen, increased the stock’s price target significantly to $130, up from the previous $94, while reiterating a Buy rating. The adjustment follows e.l.f. Beauty’s announcement of its plans to acquire skincare brand Rhode for $1 billion, a move that is anticipated to boost the company’s growth trajectory. The company has already demonstrated impressive growth, with revenue surging 46% in the last twelve months to $1.3 billion. InvestingPro data shows the company maintains excellent gross margins of 71%, suggesting strong pricing power in the competitive beauty market.
Chen’s analysis suggests that the acquisition is a strategic step for e.l.f. Beauty, positioning it to evolve into a global, disruptive beauty platform. The analyst pointed out that while e.l.f. Beauty is set to benefit from Sephora’s partnership in the near term, maintaining long-term lifestyle relevance and achieving product growth and customer retention are critical areas that need attention. According to InvestingPro’s analysis, the company’s overall financial health score is "GREAT," with particularly strong marks in profitability metrics.
The acquisition news comes alongside e.l.f. Beauty’s latest financial report, which showed better-than-expected results for the fourth quarter. While the company has not provided any financial guidance for FY26, leaving some future performance aspects uncertain, analysts tracked by InvestingPro remain optimistic about future growth. The stock currently trades at a P/E ratio of 65, reflecting high growth expectations. For deeper insights into e.l.f. Beauty’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Despite this, TD Cowen’s stance remains bullish on e.l.f. Beauty’s prospects. The firm believes that e.l.f. will continue to capture market share both in the mass market and the prestige sector of the beauty industry. This optimism is reflected in the revised price target, signaling a positive outlook for the company’s stock performance.
Investors are watching closely as e.l.f. Beauty embarks on this significant expansion through the Rhode acquisition. The company’s ability to leverage its existing strengths while integrating Rhode’s offerings will be crucial to its success in the competitive beauty market.
In other recent news, e.l.f. Beauty has been the focus of several analyst upgrades following its impressive fourth-quarter financial results, which exceeded expectations. Jefferies raised its price target for e.l.f. Beauty to $115, citing strong sales driven by volume growth. Similarly, Canaccord Genuity increased its target to $114, highlighting a 3.6% increase in sales and adjusted earnings per share that surpassed forecasts. BofA Securities also lifted its price target to $113, attributing this to e.l.f. Beauty’s strategic acquisition of the skincare brand Rhode. This acquisition, valued at $1 billion, is expected to diversify e.l.f. Beauty’s product portfolio and enhance its market presence. Morgan Stanley (NYSE:MS) adjusted its price target to $105, acknowledging the company’s adept management of tariffs and favorable court rulings. Piper Sandler analysts raised their target to $109, praising e.l.f. Beauty’s strategic capital deployment and potential for growth. These developments reflect a strengthened outlook for e.l.f. Beauty as it continues to expand its offerings and navigate market challenges.
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