UBS has raised its price target for e.l.f. Beauty (ELF) to $102.00 from $98.00, while keeping a Neutral rating on the stock. The new target remains below the analyst high target of $136 but sits above a separate fair-value estimate, suggesting UBS views the shares as modestly rich relative to that benchmark.
The analyst action followed e.l.f. Beauty's robust third-quarter performance, which outpaced expectations largely because of stronger top-line growth tied to the rhode brand and lower selling, general and administrative expenses. The company continues to report healthy gross profit margins - 70.3% per InvestingPro data - underpinning the improved near-term results.
Management raised fiscal year 2026 guidance to reflect the third-quarter strength. UBS cautioned, however, that the updated guidance implies a more challenged fourth-quarter exit rate on the bottom line, raising questions about earnings momentum into the fiscal year end.
Market reaction was pronounced after the results were disclosed. Shares initially jumped nearly 20% in after-hours trading, then trimmed those gains to roughly 5-6% as investors digested the guidance details and weighed concerns about the growth path for the core e.l.f. portfolio. In a separate note, it was also recorded that the stock experienced a slight decline in aftermarket trading at one point following the report.
UBS indicated the revised guidance likely contains some cushion related to the rhode business, and that investor debate is centering on whether the core e.l.f. franchise can return to stronger consumption trends. The firm highlighted uncertainty over consumption improvement as year-over-year comparisons grow tougher heading into fiscal 2027.
Beyond top-line and margin dynamics, liquidity and leverage metrics remain favorable. Data show the company operates with moderate debt and a strong current ratio of 2.76, with liquid assets exceeding short-term obligations, providing a buffer as investors assess forward momentum.
On an absolute performance basis, e.l.f. reported an outstanding third quarter of fiscal 2026. Earnings per share came in at $1.24, versus an expected $0.70, a 77.14% surprise. Revenue reached $489.5 million compared with an anticipated $455.82 million, a 7.39% beat. Those results underscore the company’s ability to exceed market estimates, even as market participants parse guidance and the durability of growth drivers.
In sum, UBS' price-target increase reflects the stronger-than-expected quarter and the potential contribution from the rhode brand, but the maintained Neutral rating signals that the analyst still sees limited upside absent clearer evidence of sustained improvement in the core e.l.f. business as it moves into a more challenging comparative period.
What this means for markets
- Analyst repositioning can temper near-term stock momentum despite strong reported results.
- Retail and consumer discretionary sectors will watch the resilience of core beauty portfolios versus newer brand acquisitions.
- Credit and liquidity metrics reduce downside risk from a balance-sheet perspective in the short term.