Stifel cuts e.l.f. Beauty stock target to $85 from $105

On Friday, Stifel analysts adjusted their outlook on e.l.f. Beauty (NYSE:ELF) shares, reducing the price target to $85.00 from the previous $105.00 while maintaining a Hold rating on the stock. The stock has experienced significant pressure, falling over 51% in the past six months, with a sharp 11% decline just last week. This adjustment follows e.l.f. Beauty’s announcement of lowered full-year guidance across all metrics. According to InvestingPro data, despite recent challenges, the company maintains impressive gross profit margins of 71% and a solid financial health score. The company now expects fourth quarter sales for fiscal year 2025 to grow by approximately 1%, a stark contrast to the consensus expectations of 19%. The adjusted EBITDA is also anticipated to fall roughly 15% below the market consensus. This guidance revision comes despite the company’s strong historical performance, with revenue growing 59% over the last twelve months. For investors seeking deeper insights, InvestingPro offers 18 additional investment tips and comprehensive analysis through its Pro Research Report.

The company has attributed this downward revision to weaker-than-anticipated trends observed in January. Despite this, e.l.f. Beauty suggests that the implied sales growth does not reflect its normal run-rate sales trends. Several factors have been cited for the softer sales guidance, including the ongoing muted growth within the U.S. beauty category, less favorable reception to early 2025 product innovations, and the impact of retailers advancing sales into the third quarter of fiscal year 2025, which also saw increased inventories compared to the previous year.

Stifel’s analysis points to a broader concern, noting that while the sales guidance for the fourth quarter appears conservative, there are signs of a slowdown in the company’s growth and market share expansion. Scanner data reviewed by the analysts indicates that e.l.f. Beauty’s sales have been solely driven by distribution gains. Moreover, sales in two of the company’s five key product categories, which collectively account for 52% of total sales, experienced a decline in the third quarter of fiscal year 2025.

The market will be closely monitoring e.l.f. Beauty’s performance as it navigates through these challenges in an increasingly competitive beauty industry. Trading at a P/E ratio of 45x and currently showing oversold conditions based on technical indicators, the stock presents a complex investment case. The company’s stock price may respond to these developments as investors reassess the brand’s growth prospects and market position in light of the revised guidance and Stifel’s price target adjustment.

In other recent news, several financial firms have adjusted their outlooks on e.l.f. Beauty. Canaccord Genuity reduced its price target to $105, despite the company’s sales growth of 31.1% in the third quarter of fiscal 2025, which surpassed expectations. However, increased freight costs and foreign exchange headwinds led to lower profitability. Meanwhile, Raymond (NSE:RYMD) James maintained a Strong Buy rating but reduced the price target from $175 to $120, citing the company’s conservative fourth-quarter outlook.

Goldman Sachs also maintained its Buy rating but reduced the price target from $165 to $142, following e.l.f. Beauty’s revised fiscal year 2025 outlook. In contrast, UBS downgraded e.l.f. Beauty stock from Buy to Neutral and significantly reduced the price target to $74, following a nearly 30% decline in the company’s share value over the last month. Lastly, Piper Sandler adjusted the price target for e.l.f. Beauty to $131 from $167, while maintaining an Overweight rating on the stock, suggesting the recent decline in e.l.f. Beauty’s share price was excessive. These are recent developments in the financial outlook for e.l.f. Beauty.

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