In a report released today, Oliver Chen from TD Cowen maintained a Buy rating on e.l.f. Beauty, with a price target of $100.00.
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Oliver Chen has given his Buy rating due to a combination of factors that indicate a strong potential for e.l.f. Beauty’s stock. The recent decline in the stock price, approximately 30% since the second quarter’s report, has resulted in a more attractive valuation. The current price-to-earnings ratio stands at 22 times the projected earnings for the next fiscal year, which is significantly lower than the three-year average of 38 times. This presents a buying opportunity if the core e.l.f. brand shows improvement in line with the second half guidance and strengthens further.
Moreover, the consumption data from the third quarter to date shows an acceleration in sales, with a notable increase in demand for the core e.l.f. brand. According to Nielson data, sales have grown by mid-teens percentage on average, with a 22% increase in the latest week compared to the previous week’s 14%. This indicates robust demand and core brand strength. Additionally, the potential for upside in the second half of the year is supported by normalizing shipments, distribution expansions, and a strong innovation pipeline, which could drive growth beyond the expected 2-5%.
Chen covers the Consumer Cyclical sector, focusing on stocks such as Tapestry, LVMH Moet Hennessy Louis Vuitton, and Canada Goose Holdings. According to TipRanks, Chen has an average return of 6.2% and a 53.01% success rate on recommended stocks.