e.l.f. Beauty (ELF – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Mark Astrachan from Stifel Nicolaus maintained a Hold rating on the stock and has a $85.00 price target.
Mark Astrachan has given his Hold rating due to a combination of factors affecting e.l.f. Beauty’s financial outlook. The company reported mixed results for the third quarter of fiscal year 2025, with sales figures surpassing expectations but adjusted EBITDA falling short. This has led to a reduction in full-year guidance, with anticipated sales growth for the fourth quarter being significantly lower than market consensus. The slowdown in U.S. beauty category growth, less favorable reception of early 2025 product innovations, and retailers pulling forward sales into the previous quarter have all contributed to this cautious outlook.
Additionally, Astrachan notes that while e.l.f. Beauty has shown growth in international markets and digital consumption, these have not been enough to offset concerns over slowing domestic growth and high inventory levels. Inventory remains elevated, impacting working capital and resulting in negative free cash flow so far in the fiscal year. Consequently, while there is potential for upside if sales trends improve, the current indicators suggest that the stock is likely to remain within a range in the near term, justifying the Hold rating.
In another report released today, Morgan Stanley also downgraded the stock to a Hold with a $70.00 price target.
Based on the recent corporate insider activity of 70 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ELF in relation to earlier this year.