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On Monday, Raymond (NSE:RYMD) James reaffirmed a Strong Buy rating and a $95.00 price target on e.l.f. Beauty (NYSE:ELF) shares, a company currently valued at $4.73 billion. The company announced on its Instagram that it would implement a $1 price increase due to inflation and tariffs. Despite the price hike, e.l.f. Beauty emphasized that 75% of its products would remain $10 or below. This pricing strategy appears sustainable given the company’s impressive 71.11% gross profit margin, according to InvestingPro data. This transparency and commitment to value were met with a largely positive response from consumers on social media.
The company’s stock has shown an upward trajectory following the announcement, keeping pace with its industry peers. With analyst targets ranging from $70 to $120 per share, and impressive revenue growth of 46.27% in the last twelve months, the market appears optimistic about e.l.f. Beauty’s prospects. Analysts at Raymond James had predicted that pricing would play a crucial role in e.l.f. Beauty’s strategy to mitigate the effects of tariffs. According to their analysis, even with a potential 50% demand elasticity, the company should be able to maintain its gross profit dollars.
The resilience of beauty product demand, which tends to be inelastic, is a positive sign for e.l.f. Beauty. The company also has the potential to diversify its supply chain and has recently expanded its international presence with the addition of over 1,200 new doors, which could lessen the impact of U.S. tariffs.
e.l.f. Beauty is scheduled to report its fourth-quarter earnings on May 28, and expectations are set for strong results, possibly exceeding forecasts. The recent success of a new lip product and the brand’s expansion into The Netherlands and Belgium are seen as strategic moves to counteract tariff pressures. With a healthy current ratio of 1.9 and strong financial metrics, InvestingPro analysis suggests the stock may be undervalued at current levels. Analysts believe that the financial year 2026 could unfold more favorably for e.l.f. Beauty than initially anticipated by the market. Discover 15+ additional exclusive ProTips and comprehensive analysis in the Pro Research Report, available to InvestingPro subscribers.
In other recent news, e.l.f. Beauty has announced a change in its board of directors, with Charles "Chip" Victor Bergh set to join as a Class III director following the resignation of Beth Pritchard. Bergh’s extensive experience includes leadership roles at Levi Strauss (NYSE:LEVI) & Co. and Procter & Gamble. Meanwhile, DA Davidson has adjusted its financial outlook for e.l.f. Beauty, reducing the price target from $80 to $75, and then further to $64, while maintaining a Neutral rating. The firm noted a slowdown in point-of-sale growth in U.S. tracked channels, despite some improvement in recent weeks.
DA Davidson’s analysis highlighted e.l.f. Beauty’s guidance for the fourth fiscal quarter of 2025, which suggests sales could range from a 1% decrease to a 3% increase, driven by strong international growth. However, concerns remain about meeting expectations for fiscal year 2026, with sales and EBITDA growth projections of 10% and 11%, respectively. The firm also mentioned that recent product introductions have been incremental, with anticipation for a significant launch in April. The revised price targets reflect a cautious approach, with the firm expressing the need for evidence of a recovery in U.S. POS growth to support a more positive outlook.
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