Motley Fool analyst flags potential 'great entry point' for e.l.f. Beauty

Now may be a good time to buy shares of mid-cap cosmetics company e.l.f. Beauty, argues Motley Fool contributor Jennifer Saibil in a new post. The stock has plunged around 32% year to date and has yet to recover, despite what the analyst described as a “fantastic” latest quarterly report.

"Now is a great entry point for investors who can hold the stock for the long term and tolerate short-term volatility," Saibil wrote. The company’s stock has fallen around 32% since January 1 to about $52 per share despite strong financial results.

In the fourth quarter of its fiscal 2026, ended March 31, net sales increased 35% year over year to $449.3 million, while the gross margin expanded 1.4 percentage points to 73%. Adjusted earnings came in at $0.32 per share, ahead of Wall Street expectations of $0.29 per share, Saibil wrote. She described the quarter as “fantastic” and said the biggest contributor to the results was Rhode, the beauty brand e.l.f. Beauty acquired last year from model Hailey Bieber.

Investors remain concerned about the impact of tariffs on the company’s business, Saibil said. Recall that U.S. President Trump announced higher broad tariffs in early April last year. Following the first quarter of its fiscal 2026, ended June 30, e.l.f. Beauty reported a 30% decline in net income year over year to $33.3 million and declined to provide a full-year guidance because of tariff-related uncertainty. The company sources about 75% of its products from China, Freedom Broker previously noted.

To offset the impact of tariffs, e.l.f. Beauty raised prices across its portfolio by $1 in August 2025. That led to lower unit sales, Saibil wrote.

During its earnings call for the second quarter of its fiscal 2026, ended September 30, the management described the impact of tariffs on profitability as critical but nevertheless provided fiscal 2026 guidance. The company projected net sales of $1.55-$1.57 billion, representing roughly 18-19% growth versus fiscal 2025.

On November 6, the day after the results were released, the stock plunged 35%. Two Wall Street analysts cut their target prices, while Piper Sandler downgraded e.l.f. Beauty shares from “buy” to “hold.”

After the U.S. and China agreed to reduce tariffs later in the year, the company raised its fiscal 2026 revenue outlook to roughly $1.6 billion. However, Saibil noted that Trump has again signaled that higher tariffs remain a possibility, meaning uncertainty around e.l.f. Beauty’s business persists.

According to MarketWatch data, e.l.f. Beauty has 11 “buy” calls versus six “hold” ratings from Wall Street analysts. The average target price is $72.40 per share, implying upside of about 39%.