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Investing.com - Morgan Stanley (NYSE:MS) upgraded e.l.f. Beauty (NYSE:ELF) from Equalweight to Overweight on Monday, raising its price target to $134.00 from $114.00. The company, currently valued at $6 billion, maintains impressive gross profit margins of 71% and has demonstrated strong revenue growth of 19% over the last twelve months.
The upgrade comes after significant stock volatility following an unexpected slowdown in U.S. sales for the beauty company over the past few quarters. Morgan Stanley cited the current situation as presenting an "attractive entry point" for investors. According to InvestingPro data, the stock currently trades at $101.77, significantly below its 52-week high of $172.49, with an overall financial health score rated as "GREAT."
The firm noted that e.l.f. Beauty shares have lost half their value from last year’s all-time high, including a 10% drop following the company’s fiscal first-quarter earnings report, compared to a flat S&P performance on the same day.
Morgan Stanley acknowledged several factors contributing to investor uncertainty, including "vague but disconcerting" fiscal second-quarter guidance with temporary pressure points, concerns about the low-end U.S. consumer, unclear demand impact from price increases, and limited visibility into the rhode deal.
The stock has faced similar challenges to other high-growth small and mid-cap companies that have missed market expectations, making e.l.f. Beauty "a very complicated and uncertain story" according to the investment bank’s analysis.
In other recent news, e.l.f. Beauty reported its fiscal first-quarter 2026 results, showcasing a 9% year-over-year sales growth to $354 million. The company’s earnings per share came in at $0.89, exceeding forecasts of $0.84. This performance slightly surpassed consensus estimates, although the company chose not to issue guidance amid tariff volatility. Following the earnings report, Deutsche Bank (ETR:DBKGn) upgraded e.l.f. Beauty from Hold to Buy, citing the stock’s recent decline as an attractive entry point with potential upside. Meanwhile, BofA Securities reiterated its Buy rating and maintained a $135 price target, highlighting the company’s acquisition of Rhode and international expansion plans. Canaccord Genuity lowered its price target to $128 due to tariff concerns but maintained a Buy rating. Additionally, Morgan Stanley adjusted its price target to $114 while keeping an Equalweight rating, noting the limited details provided about the Rhode acquisition. These developments reflect a mix of optimism and caution among analysts regarding e.l.f. Beauty’s future prospects.
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