e.l.f. Beauty Shares Plunge Following Disappointing Outlook

e.l.f. Beauty investors faced a brutal sell-off last week as the company's stock plummeted approximately 35%. This dramatic decline was triggered by a quarterly revenue miss and a significantly reduced full-year forecast, highlighting challenges from rising tariff expenses and more cautious consumer spending patterns.

The cosmetics firm delivered a mixed quarterly performance. While it surpassed earnings expectations with $0.68 per share, it fell short on the top line, generating $343.9 million in revenue against analyst projections of $367.95 million. The deeper concern for the market was the substantial downward revision to its annual guidance.

The company now anticipates:
- Full-year revenue in the range of $1.55 billion to $1.57 billion, well below the previously expected $1.65 billion.
- Projected earnings per share between $2.80 and $2.85, a sharp cut from the $3.58 consensus estimate.

Profitability also contracted, with the quarterly gross margin falling 165 basis points to 69%. Management attributed this pressure primarily to escalating tariff costs, which are projected to exceed $50 million by fiscal year 2026.

Wall Street Reacts with Widespread Target Cuts

Financial analysts moved quickly to reassess their positions on the stock, slashing price targets across the board.

Should investors sell immediately? Or is it worth buying elf Beauty?

• TD Cowen adjusted its target down to $100 from $110, maintaining a Buy rating.
• UBS made a significant reduction, lowering its target to $105 from $150, with a Neutral stance.
• Canaccord Genuity cut its target from $165 to $136, while also keeping a Buy recommendation.

Despite these substantial revisions, a majority of analysts have reaffirmed their positive long-term ratings. The average price target now sits at $130.06, suggesting a potential upside of nearly 67% from current levels.

Strategic Moves Amid Market Headwinds

In the face of these challenges, e.l.f. Beauty continues to pursue growth through international expansion. The company recently launched its products in all ULTA Beauty locations throughout Mexico. This follows a series of strategic acquisitions, including the skincare brands Rhode, founded by Hailey Bieber, and Naturium, which have diversified and strengthened its product portfolio.

However, the recent quarterly report signals a potential inflection point. The company’s remarkable streak of 27 consecutive quarters of sales growth has been broken, revealing cracks in its previously unshakeable growth narrative. A significant vulnerability remains its supply chain concentration, with 75% of production reliant on China, presenting a continued strategic risk.

All eyes will now be on the company's third-quarter results, scheduled for release in February 2026. The intervening period will test investor patience, leaving the market to debate whether the current share price weakness represents a temporary setback or a strategic buying opportunity.