e.l.f. Beauty: Strong Q3 and Raised Outlook Tempered by Valuation and Growth Durability Concerns Supporting Hold Rating

Peter Grom, an analyst from UBS, maintained the Hold rating on e.l.f. Beauty. The associated price target was raised to $102.00.

Peter Grom has given his Hold rating due to a combination of factors tied to both strong recent performance and lingering uncertainties. He acknowledges that e.l.f. Beauty delivered a notably robust third quarter, outperforming expectations on revenue—helped significantly by the rhode acquisition—and on profitability, supported by lower SG&A expenses. The company also lifted its fiscal 2026 earnings and sales outlook, signaling confidence in continued growth, and Grom even models slightly higher EPS than management’s guidance, reflecting his view that rhode assumptions may still be conservative. However, he notes that the updated guidance implies a softer earnings exit rate in the fourth quarter, and that marketing and digital investments are set to rise meaningfully, which could pressure margins.
At the same time, Grom emphasizes that investor sentiment remains fragile given the number of moving parts in the story, particularly around how sustainable the core e.l.f. brand’s consumption trends will be once lapping easier comparisons and heading toward more difficult benchmarks in fiscal 2027. He believes the market is still wrestling with the true underlying growth trajectory of the legacy business, and that the latest results did not fully resolve those concerns. With the shares already trading at a relatively rich multiple of roughly 24x next-twelve-month earnings, he sees limited near-term valuation upside without clearer evidence that both revenue and earnings momentum can be maintained. Consequently, he recommends investors wait either for better visibility into the durability of growth or for a more attractive entry point before taking a more constructive stance, supporting his decision to maintain a Hold rating.

In another report released today, TipRanks – Google also reiterated a Hold rating on the stock with a $92.00 price target.