Morgan Stanley has increased confidence in e.l.f. Beauty, Inc. topline upside

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Morgan Stanley lifted its price target for e.l.f. Beauty, Inc. (NYSE:ELF) to $94 from $75 per share, maintaining an Overweight rating on the stock in a note to clients on Friday.

Analysts told investors that ELF is their preferred SMID cap name, and they have increased confidence behind their call for large topline upside vs consensus, supported by accelerating Q1 U.S. scanner data sales.

“Following a large reported revenue growth acceleration fiscal YTD in the last three quarters to 36% YoY growth vs 23% in the prior four quarters (FY22) or even more so on a two-yr basis to 33% fiscal YTD growth vs 18% in the prior four quarters, ELF’s U.S. scanner data growth has inflected even more to 66% QTD on a YoY basis, well above 28.0% in CY22 and 18.7% CY21,” the analysts wrote.

They added that on a CAGR basis vs a pre-COVID 2019, U.S. scanner data growth also accelerated to 24% quarter-to-date, far above 16% in CY22 and 11% in CY21.

“Robust growth is being driven by the beauty category sustaining its momentum on a post-COVID basis, but importantly, even more so ELF’s recent inflection in market share gains well above even strong historical levels, with ELF’s YoY share up 230 bps QTD to 7.6%, well above a 95 bp increase in CY22 and 30 bps in CY21.”