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On Friday, Goldman Sachs maintained its Buy rating on e.l.f. Beauty (NYSE:ELF) but reduced the price target from $165.00 to $142.00. The adjustment comes after e.l.f. Beauty revised its fiscal year 2025 outlook, acknowledging a slower start to the calendar year 2025 due to softer consumption trends. Despite a strong third fiscal quarter performance and market share gains, with impressive revenue growth of 59% and industry-leading gross margins of 71%, the company’s management opted for a more conservative forecast for FY25. According to InvestingPro, analysts maintain a positive outlook with price targets ranging from $105 to $180.
The softened consumer demand in January prompted e.l.f. Beauty’s management to adjust their expectations, which in turn influenced Goldman Sachs’ reassessment of the company’s future financial performance. The investment firm has revised its estimates for both FY25 and FY26, aligning them with the beauty company’s updated guidance. The stock currently trades at $88.49, near its 52-week low of $85.41, presenting what InvestingPro analysis suggests could be an attractive entry point, with multiple ProTips indicating potential value opportunity.
Goldman Sachs analyst noted that while the lowered outlook is seen as a temporary challenge, it has resulted in a more clouded near-term visibility for e.l.f. Beauty’s earnings trajectory. However, the firm believes that the core long-term earnings algorithm and growth opportunities for e.l.f. Beauty remain largely unchanged.
The revised price target of $142.00 represents a decrease of $23.00 from the previous target, reflecting the updated estimates and the current market conditions that e.l.f. Beauty faces. Despite the reduction, Goldman Sachs continues to endorse a Buy rating, suggesting confidence in the company’s capacity to navigate through the present headwinds and capitalize on its strategic initiatives in the long run.
In other recent news, e.l.f. Beauty has been a focal point for several analysts. UBS downgraded e.l.f. Beauty from Buy to Neutral, slashing their target price to $74.00. This adjustment was made due to a slowdown in U.S. market trends and a potential deceleration in growth. Simultaneously, Piper Sandler reduced their price target for e.l.f. Beauty to $131, still maintaining an Overweight rating, expressing confidence in the company’s potential for stabilization and growth.
In contrast, DA Davidson reaffirmed a Buy rating on e.l.f. Beauty with a price target of $170.00, indicating the upcoming financial guidance could potentially beat expectations for the fiscal third quarter of 2025. Canaccord Genuity, while maintaining a Buy rating, reduced their target price to $174, citing a slowdown in sales momentum as the reason for the adjustment.
These recent developments suggest a mixed outlook for e.l.f. Beauty, with analysts expressing varying levels of confidence in the company’s future performance. The company’s earnings report, due to be released soon, is anticipated to provide further clarity on its financial health and growth trajectory.
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