What Happened?
Shares of cosmetics company e.l.f. Beauty (NYSE:ELF) jumped 4.2% in the morning session after the stock continued to rally following a positive analyst outlook.
The momentum builds on Wednesday's 8.73% surge, which occurred after Deutsche Bank raised its outlook on the company. The bank viewed a recent dip after an earnings report as an attractive buying opportunity, signaling a potential upside of over 20%. Investor confidence is also supported by the company's strong performance metrics and strategic shifts. CEO Tarang Amin recently highlighted a significant move to reduce manufacturing dependency on China from 100% to 75%, showcasing supply chain diversification. This positive analyst sentiment, coupled with the company's consistent growth, appears to be fueling the stock's continued upward trend.
After the initial pop the shares cooled down to $128.77, up 3.1% 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 49 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 gained 6.7% on the news that strong earnings from retailer Kohl's highlighted robust consumer spending in the beauty sector. Kohl's reported second-quarter adjusted earnings that nearly doubled analyst expectations, causing its stock to soar. The department store giant attributed much of its success to its partnership with beauty retailer Sephora, which has now been rolled out to all of its locations. Kohl's noted that its beauty sales have surged, positioning the company to build a $2 billion beauty business. This positive news from a major retailer suggests strong underlying demand for cosmetic and skincare products, which is likely boosting investor confidence in specialized beauty companies like e.l.f. Beauty.
e.l.f. Beauty is up 4.7% since the beginning of the year, but at $128.77 per share, it is still trading 16% below its 52-week high of $153.32 from August 2024. Investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $6,590.
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