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Investing.com -- e.l.f. Beauty (NYSE:ELF) shares jumped over 7% in premarket trading on Thursday after the company reported fourth quarter earnings that beat analyst estimates, and announced $1 billion deal to acquire skincare brand rhode.
On Wednesday, shares had initially plunged in after-hours trading as investors reacted to the news.
The beauty company posted adjusted earnings per share of $0.78, surpassing the consensus estimate of $0.73. Revenue grew 4% YoY to $332.6 million, also topping expectations of $327.99 million.
However, the focus was on e.l.f.’s announcement that it has signed a definitive agreement to acquire rhode, a fast-growing skincare brand founded by Hailey Bieber, for $800 million upfront plus up to $200 million in potential earnouts. The deal values rhode at approximately 3.8 times its last 12 months revenue of $212 million.
"rhode further diversifies our portfolio with a fast-growing brand that makes the best of prestige accessible," said e.l.f. Chairman and CEO Tarang Amin. "We are excited by rhode’s ability to break beauty barriers, fully aligning with e.l.f. Beauty’s vision to create a different kind of company."
For the full fiscal year 2025, e.l.f. Beauty’s net sales increased 28% to $1.31 billion. The company gained 190 basis points of market share in the U.S. during the year.
William Bair analysts reacted positively to the deal news, saying it has both strategic and financial merits.
"...we believe the company is well positioned to be a share gainer in global beauty—cosmetics and skincare—and view the planned acquisition of rhode (announced in concert with fiscal fourth-quarter earnings) as another strong arrow in the company’s quiver," they said in a note.
Analysts noted that their recent review of e.l.f. Beauty’s brand positioning and growth potential indicates the company could achieve double-digit sales growth and reach $3 billion in retail sales by 2030, with the rhode acquisition expected to add further upside.
The rhode deal is expected to close in the second quarter of fiscal 2026, subject to regulatory approvals.
(Maria Ponnezhath contributed to this article.)