MW E.l.f. Beauty's stock is on pace for record rally, as analysts debate whether uncertainty is a 'blessing in disguise'

By Bill Peters

Analysts liked e.l.f.'s Rhode acquisition and current demand trends. But some are focused on the company's ability 're-accelerate the core business' and navigate tariffs.

E.l.f. Beauty Inc. on Wednesday opted not to offer a full-year financial forecast, saying tariffs were making the consumer landscape too difficult to measure.

But on Thursday, shares of the cosmetics maker were on pace for their biggest percentage gain ever, as investors came around to current demand trends and markets got a break from tariff-related distress.

Analysts liked e.l.f.'s $(ELF)$ optimism about its business over the past several weeks, as well as its $1 billion deal to acquire Hailey Bieber's beauty brand Rhode. Moreover, the company, which relies heavily on China for its products, rode a wave of broader relief after a federal court blocked most of President Donald Trump's tariffs.

However, some of that market enthusiasm later appeared to have faded. And other analysts expressed concerns about e.l.f.'s ability to navigate the U.S. trade war.

Shares were up 23% on Thursday. However, the stock is still down nearly 40% over the past 12 months, as the beauty industry faces more competition and cools from a surge in demand following pandemic lockdowns.

During e.l.f.'s earnings call on Wednesday, Chief Financial Officer Mandy Fields expressed optimism about where the company stood right now.

"I can tell you we feel great about our business as we are in [the first quarter]," she said. "As we noted on the call, we continue to build share even into this quarter."

She continued: "We will be cycling some our space expansion in Walmart, the launch of Naturium and Ulta Beauty, and some outsized growth from an international perspective in [the first quarter]. But overall, we're feeling great about where we are."

After the close on Wednesday, e.l.f. shares initially sank, but UBS analysts said they "believe many came away with the view that solid EPS growth is still achievable in [fiscal 2026] based on the current tariff backdrop." The analysts said planned price increases would help on that front, as would the acquisition of Rhode, which they noted had been growing rapidly and will be launching products at Sephora.

E.l.f. said in an Instagram post this month that it would raise its prices by $1 starting in August as it tries to manage inflation and tariffs, which slap extra costs on imports.

BofA analysts asked whether e.l.f.'s lack of a forecast for its full fiscal year, which runs through March, was a "blessing in disguise," given the company's current momentum. And they said the Rhode acquisition "tightens [e.l.f.'s] relationship with Gen Z consumers who seek out prestige level products."

They noted that Rhode offers 10 products priced between $18 and $38, compared with e.l.f.'s average prices of $6.50 and $9.50 for beauty products. Beauty-products retailer Ulta Beauty Inc. $(ULTA)$, which reports quarterly results Thursday after the close, has said that competition within prestige beauty has increased, as more products appear in more places.

Still, with Trump's efforts to renegotiate the global trade order in flux, Oppenheimer analysts took a more cautious approach to e.l.f.

"Overall, we look favorably upon the acquisition of this fast-growing and popular beauty brand founded by Hailey Bieber, but at the same time, we are focused on management's efforts to re-accelerate the core business and manage through tariff dynamics," they said in a note on Wednesday.

"These factors further muddle the near-term for both the bulls and bears and likely drive a continued volatile trade," they said.

-Bill Peters

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May 29, 2025 13:57 ET (17:57 GMT)

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