e.l.f. Beauty Surges 4.55% Despite 333rd-Ranked $310M Trading Volume After Morgan Stanley Upgrade

On August 12, 2025, e.l.f. Beauty (ELF) closed with a 4.55% gain, trading at $111.67 per share, while its daily trading volume of $310 million ranked 333rd in the market. The move followed a recent upgrade from Morgan Stanley, which raised its price target for the stock to $134 from $114, reflecting a potential 20% upside. The firm also revised its rating to "overweight" from "equal weight," citing confidence in the brand's pricing resilience and competitive positioning despite a 14% product price hike announced on August 1.

Investor sentiment appears divided as earnings estimates have shown mixed trends. The Zacks Consensus projects current-quarter earnings at $0.75 per share, down 2.6% year-over-year, while next-year forecasts suggest a 22.2% growth. However, the Zacks Rank for ELF is currently #4 (Sell), driven by a -6.4% downward revision in earnings estimates over the past 30 days. Analysts note that while revenue growth expectations remain robust—$367.03 million for the current quarter and $1.65 billion for the current fiscal year—valuation metrics indicate the stock is trading at a premium relative to peers.

Brokerage recommendations remain cautiously optimistic, with 12 of 15 firms issuing "Strong Buy" ratings. The average brokerage recommendation (ABR) stands at 1.40, signaling a buy bias. Yet, industry experts caution against overreliance on such ratings, highlighting historical tendencies for sell-side analysts to exhibit positive bias. Meanwhile, the Zacks Rank model, which factors in earnings estimate revisions, suggests near-term underperformance relative to the broader market.

A backtest of a strategy purchasing the top 500 stocks by daily trading volume and holding for one day generated a $2,300 profit from 2022 to the present. However, the approach experienced a maximum drawdown of -15.7% in early 2023, underscoring the inherent risks of volume-driven trading strategies in volatile markets.