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On Thursday, Goldman Sachs reiterated its Buy rating on e.l.f. Beauty (NYSE:ELF) with a steady price target of $120.00, aligning with InvestingPro data showing impressive 46% revenue growth over the last twelve months and a robust 71% gross profit margin. The firm’s stance came after e.l.f. Beauty reported fiscal fourth-quarter results that surpassed expectations, with net sales growth reaching 3.6%, exceeding both the company’s guidance and market concerns about slowing demand and tariff impacts.
The highlight of the announcement was e.l.f. Beauty’s strategic move to acquire the prestige beauty brand rhode, founded by Hailey Bieber, for a sum of $1 billion, which includes a potential $200 million earnout. Goldman Sachs views this acquisition as a significant strategic advantage, allowing e.l.f. Beauty to expand into the skincare segment with a high-end brand and to diversify its consumer base. InvestingPro analysis indicates the company maintains a healthy financial position with a current ratio of 1.9 and operates with moderate debt levels.
Although e.l.f. Beauty did not provide specific guidance for fiscal year 2026 due to the unpredictable nature of tariffs, management noted positive consumption trends in the first quarter that are outpacing those seen in the fourth quarter. These trends are also reportedly ahead of the broader category. Additionally, a price increase announced by the company is expected to contribute to top-line growth starting in the second quarter of fiscal year 2026.
However, the elevated tariff rates on imports from China, which reached a total level of 170% during April and into May, are anticipated to negatively affect gross margins in the first quarter, as the company has been bringing in shipments. Goldman Sachs has adjusted its projections in light of these factors, raising top-line estimates but reducing its EPS forecasts for fiscal years 2026 to 2028. Despite these adjustments, the firm’s Buy rating and $120 price target on e.l.f. Beauty shares remain unchanged. For deeper insights into e.l.f. Beauty’s valuation and growth prospects, including 18 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, E.L.F. Beauty reported its fiscal fourth-quarter results for 2025, showcasing strong financial performance. The company exceeded earnings expectations with earnings per share of $0.78, surpassing the forecast of $0.73. Revenue also outperformed projections, reaching $332.6 million compared to the anticipated $327.99 million. Despite these positive results, E.L.F. Beauty’s stock experienced a slight dip in after-hours trading. The company ended the year with $149 million in cash, an increase from the previous year, and a 99% surge in adjusted EBITDA for Q4.
In addition to its earnings report, E.L.F. Beauty announced its acquisition of Rhode, a move expected to enhance its market position. The acquisition is valued at $1 billion, with an upfront purchase price of $800 million and an additional potential earn-out of $200 million. The transaction is anticipated to close in the second quarter of fiscal 2026 and is expected to be accretive to E.L.F. Beauty’s top-line growth and earnings.
Furthermore, E.L.F. Beauty continues to focus on international expansion and product category growth. The company plans to integrate Rhode into its portfolio, leveraging its strong digital community engagement and expanding its presence in Sephora stores across the U.S., Canada, and the UK. Despite tariff uncertainties, E.L.F. Beauty remains optimistic about its growth prospects, with plans to mitigate potential impacts through pricing adjustments and supply chain optimization.
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