Analyst advised to buy shares of e.l.f. brand. Beauty on the drawdown

Now is the best time to buy the mid-cap securities of cosmetics brand e.l.f. Beauty, says Motley Fool freelance analyst Jennifer Cybil. Since the beginning of the year, quotes of the company collapsed by almost 32% and has not yet recovered, despite the fact that the last reported quarter "was fantastic," says the analyst.

Now is a "great entry point" for e.l.f. equity. Beauty, wrote Motley Fool freelance analyst Jennifer Sybil. The company's stock has fallen 32% since Jan. 1, to $52, despite strong financial reports.

For the fourth quarter of fiscal 2026 (ended March 31), e.l.f.'s net revenue. Beauty grew 35% year-over-year to $449.3 million, while gross margins rose 1.4 percentage points to 73%. Adjusted EPS was $0.32, while analysts were expecting $0.29, Cybil writes. She calls the company's quarterly performance fantastic and notes that the biggest impact came from its Rhode cosmetics brand, which e.l.f. Beauty acquired last year from model Hailey Bieber.

Investors are still concerned about the impact of import duties on the company's business, Saibil explains. U.S. President Donald Trump announced an increase in import duties effective April 1, 2025. And already at the end of its first fiscal quarter, which ended June 30, 2025, e.l.f. Beauty reported a 30% year-over-year decline in net income, to $33.3 million, and declined to give a full fiscal year outlook because of the duties. The company buys about 75% of its products from China, Freedom Broker wrote.

To offset the impact of duties, in August 2025, e.l.f. Beauty raised the prices of all its products by $1. This resulted in lower sales, Cybil writes.

In a conference call with analysts for the second quarter of fiscal 2026 (ended Sept. 30, 2025), the cosmetics company's management called the impact of import duties on earnings critical, but still gave a forecast of $1.55 billion-$1.57 billion for 2026, about 18-19% higher than fiscal 2025.

The day after the publication of the reports, on November 6, the company's quotes collapsed by 35%, two Wall Street analysts lowered their targets for its securities. Analyst Piper Sander also changed his recommendation on e.l.f. Beauty shares from "buy" to "hold". Beauty from "buy" to "hold".

In the fall, the U.S. and China agreed to lower duties, after which the company raised its 2026 revenue outlook to about $1.6 billion.

However, Saibil notes that Trump is again not ruling out raising duties, so uncertainty around the e.l.f. business. Beauty remains.

In total, e.l.f. securities have 11 "buy" ratings from Wall Street analysts and six "hold" ratings. Beauty has 11 "buy" ratings from Wall Street analysts and six "hold" ratings. The average target price is $72.4, implying a potential upside of 39% from the last closing price.