ELF: Underlying Sales Momentum And Margin Gains Will Likely Drive Outperformance

Analysts have lowered their average price target for e.l.f. Beauty from approximately $153 to $122, citing weaker-than-expected quarterly sales, shipment timing issues, and cautious management guidance. This is occurring despite continued strong U.S. consumption trends.

Analyst Commentary

Recent updates from Wall Street reflect a shifting sentiment around e.l.f. Beauty, as a number of analysts revise their price targets lower following the company’s quarterly results. While the near-term tone has become more cautious, perspectives remain divided on the stock’s long-term potential.

• Bullish analysts view the recent pullback in the stock as a potential buying opportunity. They argue that the company’s valuation remains compelling given ongoing U.S. consumption strength.
• Despite shipment timing issues impacting reported sales, some see the conservative management guidance as beatable if strong momentum and price elasticity trends hold. This could signal potential upside if execution improves.
• Several experts highlight the upside from the integration and strong launch of the Rhode brand, maintaining robust growth forecasts for this segment into FY26 and FY27.
• The firm’s continued share gains in the beauty category and efficiency improvements, such as margin expansion from lower SG&A, are viewed as supporting further growth and potential outperformance once temporary shipment disruptions are resolved.

• Bearish analysts are concerned about the weaker-than-expected net sales in the latest quarter. They attribute the shortfall to shipment pauses and softer international growth.
• There is caution around management’s guidance, which projects only modest organic growth over the coming year. This raises doubts about near-term acceleration amid difficult year-over-year comparisons.
• Some highlight that prior expectations for upside were not met, particularly given increased operating costs and shipment timing uncertainties. This suggests a pause is warranted until trends normalize.
• Concerns persist that the rerating potential may be limited if the current volatility in smaller acquired brands, such as Rhode, leads to continued quarterly unpredictability or fails to deliver the projected revenue growth.

What's in the News

• e.l.f. Beauty officially launched at ULTA Beauty in Mexico, making its full range available online and in all ULTA Beauty locations nationwide. Popular products, including Power Grip Primer and Halo Glow Liquid Filter, are now accessible to Mexican customers. (Client Announcements)
• The company released earnings guidance for the second half and full year of 2026. The forecast calls for net sales growth of 24% to 27% for the second half, and full-year net sales of $1,550 million to $1,570 million, representing 18% to 20% year-over-year growth. (Corporate Guidance)
• e.l.f. Beauty debuted a new episode of its award-winning film series, Show Yourse.l.f., featuring professional soccer player Jess Carter. This continues its commitment to empowering women in sports and amplifying diverse voices. (Product-Related Announcements)

Valuation Changes

• Consensus Analyst Price Target: Lowered significantly from $152.93 to $121.71, reflecting recent analyst revisions.
• Discount Rate: Increased slightly from 7.61% to 7.87%, which suggests a minor adjustment in perceived risk.
• Revenue Growth: Reduced from 19.20% to 15.49%, indicating more conservative expectations for future sales expansion.
• Net Profit Margin: Improved from 13.22% to 14.77%. This points to more optimistic forecasts for profitability.
• Future P/E: Declined modestly from 36.13x to 33.93x, suggesting a slight decrease in valuation multiples projected by analysts.