What Happened?
Shares of cosmetics company e.l.f. Beauty (NYSE: ELF) fell 3.6% in the afternoon session after the stock extended its negative momentum as the company reported mixed second-quarter results and issued a disappointing outlook for its full fiscal year, which prompted a series of analyst downgrades and price target cuts.
The cosmetics company's revenue of $343.9 million fell short of analyst expectations. The outlook was the main concern, as e.l.f. Beauty forecasted that its adjusted earnings per share would drop by about 17% for the full fiscal year 2026 compared to the previous year. The company's gross margin also shrank, with management blaming the impact of higher tariff costs. Adding to the negative sentiment, Piper Sandler downgraded the stock's rating from 'Overweight' to 'Neutral' and cut its price target significantly. Other firms, including TD Cowen and Jefferies, also lowered their price targets on the stock following the announcements.
The shares closed the day at $73.73, down 3.7% from previous close.
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What Is The Market Telling Us
e.l.f. Beauty’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 32.6% on the news that the company reported mixed third-quarter 2025 results and issued a disappointing financial outlook. While its adjusted earnings per share of $0.68 beat expectations, revenue of $343.9 million fell short of analysts' estimates. The main concern for investors, however, was the company's forecast for the full year. Management's guidance for revenue of $1.56 billion and adjusted EBITDA of $304 million, at their respective midpoints, came in significantly below Wall Street's projections. Adding to concerns, the company's operating margin fell to 2.2% from 9.3% in the same quarter last year. The combination of a revenue miss and a weak forecast that implied slowing growth and profitability prompted a negative reaction from investors.
e.l.f. Beauty is down 39.8% since the beginning of the year, and at $74.01 per share, it is trading 49.5% below its 52-week high of $146.67 from September 2025. Investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $3,568.
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