Morgan Stanley maintained its Equalweight rating on e.l.f. Beauty (NYSE: NYSE:ELF) but reduced the stock's price target from $184.00 to $139.00. The adjustment follows a period of significant stock decline, with e.l.f. Beauty's shares falling by half from their peak. The firm acknowledges that the stock's recent weakness might be somewhat overstated, especially in light of e.l.f. Beauty's stronger international and e-commerce growth.
The price target revision comes in the wake of disappointing U.S. scanner data, which accounts for half of the company's mix. The firm expressed concern about the downturn in tracked channel data in the U.S., stating it was unexpected by management and the quality of the scanner data was troubling. These factors contribute to a reduced visibility for the stock's outlook.
Despite the lowered price target, Morgan Stanley's stance on e.l.f. Beauty has somewhat warmed since their earlier downgrade this year, when concerns were raised over the stock's multiple expansion during a period of challenging comparisons. At that time, the firm was cautious about the stock's valuation.
The firm's current position reflects a cautious optimism, recognizing the stock's value after the sharp pullback. However, the persisting issues with U.S. scanner data and the implications for the company's domestic performance prevent the analyst from adopting a fully positive outlook at this stage.
e.l.f. Beauty's stock adjustment by Morgan Stanley is based on recent market performance and data, indicating a complex environment for the beauty company. The firm's analysis suggests that while the current stock price may present a more attractive valuation, potential investors should be aware of the underlying challenges that might affect the company's performance in the near term.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.