DA Davidson reaffirmed its Buy rating on e.l.f. Beauty (NYSE: NYSE:ELF) shares, maintaining a price target of $223.00.
The firm's analysis noted that while point-of-sale (POS) growth for e.l.f. Beauty showed the highest weekly year-over-year increase of 16.4% in September, the overall two-year stack trend continued to slow down, currently at +72%.
This marks a deceleration from +77% in late August and +93% in late July.
The firm highlighted the need for e.l.f. Beauty's management to articulate a clear long-term growth plan to alleviate concerns about the potential slowing of growth.
According to DA Davidson, e.l.f. Beauty is positioned to surpass the fiscal second quarter 2025 consensus estimates. However, the firm anticipates that the extent of the upside and potential guidance increases could be more modest than in previous quarters.
In other recent news, Morgan Stanley maintained its Equalweight rating but reduced the price target from $184.00 to $139.00, citing concerns about U.S. scanner data. However, Piper Sandler maintained an Overweight rating and a $162.00 price target, expressing confidence in the company's upcoming early November earnings results. DA Davidson also sustained a Buy rating and a $223.00 price target, despite a slower point-of-sale growth than anticipated.
TD Cowen revised its price target for the company to $150 while keeping its Buy rating. Piper Sandler further adjusted its outlook on e.l.f. Beauty, reducing the stock's price target to $162 from $260, while still maintaining an Overweight rating.
InvestingPro Insights
Recent InvestingPro data paints a nuanced picture of e.l.f. Beauty's financial position, complementing DA Davidson's analysis. The company's revenue growth remains robust, with a 68.32% increase in the last twelve months as of Q1 2025, and a 49.99% quarterly growth in Q1 2025. This aligns with DA Davidson's observation of strong point-of-sale growth, albeit with a slowing trend.
e.l.f. Beauty's impressive gross profit margin of 70.91% underscores its operational efficiency, which could contribute to surpassing consensus estimates as suggested by DA Davidson. However, the stock's recent performance has been challenging, with a 29.25% decline over the past month and a significant 48.11% drop in the last three months, reflecting the market's concerns about growth deceleration.
InvestingPro Tips highlight that while analysts anticipate sales growth in the current year, the stock is trading at a high earnings multiple. This suggests that despite strong fundamentals, market expectations may be pricing in substantial future growth, making the company's long-term growth plan, as emphasized by DA Davidson, crucial for investor confidence.
For readers seeking a deeper understanding of e.l.f. Beauty's financial outlook, InvestingPro offers 18 additional tips, providing a comprehensive view of the company's potential and challenges in the current market landscape.
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