On Tuesday, DA Davidson reaffirmed its Buy rating on e.l.f. Beauty (NYSE:ELF) with a price target of $170.00. The firm's analyst noted the company's point-of-sale (POS) growth in tracked channels is expected to stabilize between 10% and 15%. However, e.l.f. Beauty's growth has outpaced expectations early in the third fiscal quarter of 2025 (F3Q25), showing a year-over-year increase of 20.8% five weeks into the quarter. This marks an acceleration from the 18.6% growth seen in the second fiscal quarter of 2025 (F2Q25).
The analyst highlighted that e.l.f. Beauty's year-over-year growth further accelerated to 26.6% in the most recent week, with a two-year stack growth reaching 82.7%, the highest in several weeks. This performance comes after e.l.f. Beauty reported a beat-and-raise quarter, which led to the company's share price breaking out of its previous $105 to $115 trading range.
The firm's optimism about the stock is also based on the inclusion of Amazon (NASDAQ:AMZN) first-party (1P) sales in the Nielsen data, which have been restated historically to reflect this change. The $170 price target is derived from applying a 26x multiple to the firm's estimated calendar year 2026 (CY26E) EBITDA of $375 million.
The positive outlook for e.l.f. Beauty is set against the backdrop of the company losing its top seller position, as noted by Street Insider on Friday. Despite this, the early quarter data suggests a strong setup for potential upside in F3Q25, according to the DA Davidson analyst.
In other recent news, e.l.f. Beauty reported significant growth in its second quarter of fiscal 2025, leading its category in performance. The company's management team, led by Chairman and CEO Tarang Amin, has also raised its outlook for the fiscal year 2025, indicating a positive trend in the company's operations. However, the management team also included a note of caution, reminding investors that actual results may vary from their forward-looking statements.
In the earnings call, the company's management recognized the efforts of the e.l.f. Beauty team in achieving these results. The company's strong performance for the second quarter was highlighted, showcasing its robust market position. Despite the positive trajectory, no specific misses were mentioned in the provided summary, and no specific questions and answers were highlighted.
InvestingPro Insights
E.l.f. Beauty's recent performance aligns with several key metrics and insights from InvestingPro. The company's impressive revenue growth of 59.01% over the last twelve months supports DA Davidson's optimistic outlook. This growth trajectory is further reinforced by an InvestingPro Tip indicating that analysts anticipate continued sales growth in the current year.
The company's gross profit margin of 71.0% is particularly noteworthy, reflecting e.l.f. Beauty's ability to maintain pricing power and efficiency in its operations. This is highlighted as an InvestingPro Tip, which points out the company's "impressive gross profit margins."
While the stock has shown strong performance, with a 41.08% return over the past year, investors should note that the P/E ratio stands at 67.35, suggesting a high valuation. This is consistent with an InvestingPro Tip that the company is "trading at a high earnings multiple."
For those seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for e.l.f. Beauty, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.