Market jitters over E.l.f. Beauty have been overblown, in accordance with analysts.
The mass beauty company’s shares fell almost 12 percent Wednesday, its biggest one-day fall since October, after Ulta Beauty CEO Dave Kimbell warned that demand for beauty usually had slowed by greater than he had anticipated. Other beauty firms, including the Estée Lauder Cos. and Coty Inc., also saw shares slide by 4 and 6 percent respectively. Ulta, meanwhile, dropped 15 percent.
But in a note, Anna Lizzul, a research analyst at Bank of America, described E.l.f.’s share price slide as each “overblown” and “overdone.”
She pointed to the indisputable fact that while Kimbell said the slowdown was across segments and costs during a Wednesday appearance at a J.P. Morgan conference in Recent York City, he highlighted E.l.f. as a “real growth driver for the category and for us,” contributing to Ulta’s share gain within the inexpensive beauty segment, with higher-end makeup and hair as more difficult categories.
“Following the weakness week-to-date, we see a beautiful opportunity for E.l.f. shares,” Lizzul said. “We proceed to see outsized opportunity for growth ahead with shelf space gains at Walmart and CVS, where E.l.f. is underpenetrated.”
At the identical time, Ashley Helgans, an analyst at Jefferies, added that while E.l.f.’s data has slowed in recent months attributable to tough comparisons, she remains to be seeing meaningful consumer engagement in the corporate, whose brands include E.l.f., Naturium, Well People and Keys Soulcare with Alicia Keys.
Particularly, she said there’s much opportunity for the E.l.f. brand internationally. Within the Netherlands, it just rolled out in Etos and Douglas.
“The footprint of those two retailers is critical. The Netherlands mass color cosmetics market in 2022 was value $394 million and mass skin $547 million.”
In October, E.l.f. entered Douglas in Italy, and last month it opened its first European office in London, furthering a commitment to grow the corporate’s international business.
“We see significant runway in each the U.K. and other markets all over the world,” said Tarang Amin, chairman and CEO of E.l.f. Beauty on the time of the London office opening. “E.l.f. will bring its unique value proposition, powerhouse innovation and disruptive marketing engine — which have proven to resonate across categories and geographies — into recent places and spaces with the aim to serve every eye, lip and face.”
The corporate is forecasting full-year sales in a variety of between $980 million and $990 million, compared with its previous forecast of $896 million to $906 million. Net income is anticipated to succeed in $164 million to $166 million, higher than previous expectations of $144 million to $146 million.
On Thursday, the corporate’s share price closed down 0.8 percent to $162.53. Ulta Beauty shares were 1.97 percent higher at $448.64, while Coty stock was up 1.5 percent to $11.06 and Estée Lauder stock fell 1.5 percent to $144.31.
