BofA Securities analyst Anna Lizzul reiterated the Buy rating on e.l.f. Beauty, Inc. (NYSE:ELF), raising the price forecast from $113 to $135.
Lizzul revised the first-quarter sales estimate to +12% from the previous +15%, citing early-quarter softness in scanner data. She also lowered the gross margin forecast to 69% from 70% due to tariff impacts that were not yet offset by price increases scheduled for Aug. 1.
The analyst also projects non-marketing SG&A growth to exceed the rate of sales growth in the first quarter. As a result, the first-quarter EBITDA estimate is reduced to $69 million from $90 million.
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Looking beyond the first quarter, Lizzul sees potential for sales acceleration and gross margin improvement driven by the upcoming price increases, cost savings, and possible supplier concessions.
Lizzul projects e.l.f. Beauty to issue fiscal 2026 guidance in August, which wasn't provided during the fourth-quarter earnings call.
The timing will likely follow greater clarity around tariffs, the Aug. 1 pricing implementation, and the expected closing of the Rhode acquisition.
As fiscal 2026 progresses, the analyst anticipates potential upside to revenue and margin estimates, supported by stronger-than-expected volume resilience, pricing gains, new product launches enhancing price/mix, and the integration of Rhode.
Lizzul noted that the Rhode acquisition positions e.l.f. Beauty in the prestige segment, with the deal expected to close by the end of the second quarter.
The acquisition is projected to be accretive to sales, margins, and earnings within the first year.
Rhode offers strong growth potential, especially in international markets, which currently make up about 20% of its direct-to-consumer sales but account for 74% of its social media following.
The brand is expected to launch first in Sephora stores abroad, helping differentiate it from e.l.f.’s core offerings, which are not sold at Sephora outside of Mexico.
Price Action: ELF shares are trading lower by 4.07% to $117.26 at last check Friday.
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