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Investing.com - Morgan Stanley (NYSE:MS) maintained its Equalweight rating on e.l.f. Beauty (NYSE:ELF) while raising its price target to $114.00 from $105.00 following the company’s fiscal first quarter results. The company, which boasts impressive gross profit margins of 71.24%, has demonstrated strong financial health according to InvestingPro analysis.
The investment firm noted that e.l.f. Beauty’s stock declined significantly in after-hours trading due to lack of clarity on the quarterly conference call and earnings release. The company chose not to issue guidance amid tariff volatility and provided limited details about its Rhode acquisition. This volatility is reflected in the stock’s recent performance, with InvestingPro data showing an 8.91% decline over the past week, though the company maintains strong fundamentals with a beta of 1.56.
Morgan Stanley identified multiple factors contributing to low visibility, including base business volatility, tariff-driven cost fluctuations, the intra-quarter Rhode acquisition close, pricing implementation, and the absence of company guidance. The firm specifically highlighted a fiscal second quarter mismatch where Sephora launch revenue was realized pre-transaction close while expenses were incurred post-close.
Despite these challenges, Morgan Stanley sees pricing as a significant net benefit even after accounting for tariffs and demand elasticity. The firm also expects clear long-term earnings per share accretion from the Rhode acquisition, which will build in fiscal year 2027 given timing in fiscal year 2026.
The updated price target of $114 is based on 22 times fiscal year 2027 earnings per share, with Morgan Stanley’s estimates increasing now that Rhode is included in its forecast.
In other recent news, ELF Beauty Inc . reported its first-quarter earnings for fiscal year 2026, demonstrating a 9% increase in net sales, which amounted to $354 million. The company also exceeded earnings expectations, with an earnings per share (EPS) of $0.89, surpassing the projected $0.84 by 5.95%. Despite the revenue slightly missing forecasts, these results highlight a solid performance for the quarter. Analysts at various firms have taken note of ELF Beauty’s financial results, although no specific upgrades or downgrades were mentioned in the recent reports. These developments reflect the company’s ongoing efforts to maintain growth and profitability.
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