ELF Beauty: Morgan Stanley Sees Upside After Stock Pullback

ELF Beauty, Inc. (NYSE: ELF) has been on a rollercoaster ride this year, with its stock price experiencing a significant pullback in the back half of 2024. However, Morgan Stanley analyst Dara Mohsenian recently upgraded the company's rating from Equal-Weight to Overweight, raising the price target from $139 to $153. Mohsenian believes that the stock's recent decline does not reflect the company's "attractive growth outlook."



Mohsenian cited several growth opportunities for e.l.f. Beauty, including continued market share gains in the U.S., strong international expansion, and the potential to expand the Naturium business. Additionally, the analyst expects easier year-over-year comparisons in the coming quarters, which could drive upside even beyond Morgan Stanley's above-consensus forecasts.

The analyst also noted that the stock's current valuation is compelling, trading at 30x next-twelve-month earnings, below its five-year average of 40x. This disconnect, in Mohsenian's view, presents an opportunity for investors to enter a strong long-term growth story.



ELF Beauty's strong brand positioning, product innovation, and affordable pricing have contributed to its growth prospects. The company's ability to maintain and build on its market share gains and international expansion will be crucial for its long-term success. As the company continues to execute on its growth strategies, investors may want to consider the analyst's bullish outlook and the potential upside in the stock.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long ELF.