• Morgan Stanley recently downgraded e.l.f. Beauty, citing concerns about ongoing market share losses in its core U.S. cosmetics segment and the potential impact of planned price increases after summer 2025.
• At the same time, e.l.f. is investing in growth through acquisitions like rhode, international retail expansion and high-visibility partnerships in sports and entertainment, underscoring a push to broaden its brand beyond traditional cosmetics aisles.
• We’ll now examine how worries over core cosmetics share, despite rhode’s expansion and new partnerships, could reshape e.l.f. Beauty’s investment narrative.

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e.l.f. Beauty Investment Narrative Recap

To own e.l.f. Beauty, you have to believe its brand can keep expanding beyond core U.S. color cosmetics into skin care, international, and new channels, even as competition intensifies. Right now, the key near term catalyst is how the market reacts to slowing core cosmetics share, while the biggest risk is that pricing and tariff pressures squeeze margins just as growth expectations remain high. Morgan Stanley’s downgrade and lower targets highlight these tensions but do not, by themselves, change the long term thesis.

The most relevant recent update here is Morgan Stanley’s focus on core U.S. cosmetics share losses and sensitivity to future price hikes, which directly intersects with existing concerns about overreliance on pricing as a margin lever. That sits alongside bullish commentary from other firms keeping Buy ratings while trimming targets, underscoring a debate about whether acquisitions like rhode, international expansion, and high profile partnerships can offset pressure in e.l.f.’s home category.

But against that growth story, investors should also be aware of the risk that rising input costs and tariffs collide with planned price increases and ...

e.l.f. Beauty's narrative projects $2.2 billion revenue and $204.0 million earnings by 2029. This requires 12.7% yearly revenue growth and about a $100 million earnings increase from $103.9 million today.

Uncover how e.l.f. Beauty's forecasts yield a $103.40 fair value, a 71% upside to its current price.

Exploring Other Perspectives

Some of the most optimistic analysts, who were penciling in about US$2.2 billion of revenue and nearly US$193.2 million of earnings by 2029, may now need to reassess whether core U.S. cosmetics share pressure and tariff sensitive margins fit with that kind of bullish path, and you should know that opinions on what comes next can differ widely.

Explore 12 other fair value estimates on e.l.f. Beauty - why the stock might be worth over 2x more than the current price!

The Verdict Is Yours

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your e.l.f. Beauty research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free e.l.f. Beauty research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate e.l.f. Beauty's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.