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On Thursday, Piper Sandler analyst Korinne Wolfmeyer increased the price target for e.l.f. Beauty (NYSE:ELF) shares to $109 from $81, while maintaining an Overweight rating on the stock. The adjustment follows e.l.f. Beauty’s solid fourth fiscal quarter performance and the company’s recent business developments, which include a significant $1 billion acquisition and a decision not to provide financial guidance. According to InvestingPro data, the company has demonstrated impressive revenue growth of 46% over the last twelve months, reaching $1.3 billion, with the stock currently trading near its InvestingPro Fair Value.
Wolfmeyer’s commentary highlighted the health and improvement of e.l.f. Beauty’s underlying business, noting that the impacts of tariffs appear manageable based on current information. The analyst expressed confidence in e.l.f. Beauty’s potential to continue as a top performer in terms of growth and profitability within the beauty industry. This confidence appears well-founded, as InvestingPro data shows the company maintains an impressive 71% gross profit margin and a strong financial health score. The firm’s strategic capital deployment was also praised, reinforcing medium to long-term confidence in the company.
Despite the absence of financial guidance from e.l.f. Beauty’s management, Piper Sandler sees no need to substantially alter their projected EBITDA targets or overall investment thesis. Adjustments to sales and margin estimates are expected to largely offset each other. The acquisition of the beauty brand rhode is seen as a strategic move that enhances e.l.f. Beauty’s position in the market, with the added brand being highly sought after and not posing significant leverage risks. This assessment aligns with InvestingPro metrics showing the company operates with moderate debt levels and maintains a healthy current ratio of 1.9, indicating strong liquidity.
The new price target of $109 is based on an approximately 21 times fiscal year 2026 estimated EV/EBITDA multiple, an increase from the previous 16 times. Wolfmeyer concluded that, despite the lack of guidance, e.l.f. Beauty’s shares remain undervalued compared to historical levels, making it an attractive investment within the beauty sector. For deeper insights into e.l.f. Beauty’s valuation and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, e.l.f. Beauty reported impressive fourth-quarter results, with sales and earnings exceeding expectations. The company’s net sales grew by 3.6%, surpassing both internal and market projections, while earnings per share reached $0.78, outpacing consensus estimates. A strategic highlight for e.l.f. Beauty was the acquisition of the skincare brand Rhode, co-founded by Hailey Bieber, valued at $1 billion. Analysts from Jefferies, Canaccord Genuity, BofA Securities, Raymond (NSE:RYMD) James, and Goldman Sachs have all expressed positive sentiments regarding this acquisition, noting its potential to enhance e.l.f. Beauty’s market position and product portfolio.
Jefferies raised its price target for e.l.f. Beauty to $115, highlighting strong sales and the promising Rhode acquisition. Canaccord Genuity also increased its target to $114, citing the acquisition’s expected positive impact on earnings. BofA Securities set a new target of $113, emphasizing the distribution opportunities presented by Rhode’s direct-to-consumer model. Raymond James adjusted its target to $105, acknowledging the company’s market share gains and international expansion. Meanwhile, Goldman Sachs maintained a $120 target, focusing on the strategic advantage of the Rhode acquisition in the skincare segment.
Despite these positive developments, e.l.f. Beauty has refrained from providing specific guidance for fiscal year 2026 due to uncertainties related to tariffs. The company acknowledged the potential impact of elevated tariff rates on gross margins, but analysts remain optimistic about its long-term growth prospects.
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