Market Overview

E.L.F. Beauty Increases Shelf Space At Target Over 50%


e.l.f. Beauty Inc (NYSE: ELF) reported another strong set of quarterly results and announced impressive guidance for FY2017. The company benefited from a more than 50 percent increase in shelf space at Target Corporation (NYSE: TGT), Wells Fargo’s Bonnie Herzog said in a report. She maintained a Market Perform rating on the company, with a valuation range of $28-$30.

E.L.F. Beauty reported Q4 revenue growth of 17 percent, versus expectations of 15 percent. Adjusted EBITDA came in at $22.1 million, beating Wells Fargo’s estimate by $2.8 million. At $0.19, the company’s EPS was ahead of the consensus expectation of $0.13.

Increased Shelf Space

Target is E.L.F. Beauty’s largest customer, contributing nearly 30 percent of total sales. A biannual shelf space reset at Target resulted in E.L.F. Beauty moving from an average of 6 linear square feet to over 12.

“ELF received the up-front benefit from the pipeline fill in Q4, but the reset won’t be complete until the end of Q2, with the full impact not hitting until Q3,” Herzog wrote.

Related Link: In The Beauty Industry, E.L.F. Is Looking Attractive

FY17 Guidance

E.L.F. Beauty projected revenue of $285-$295 million, adjusted EBITDA of $61-$64 million and EPS of $0.40-$0.43. The analyst raised the EPS estimates for 2017 and 2018 by $0.07 to $0.42 and $0.52, respectively.

“Momentum continues to build as ELF demonstrates why it is one of the best growth stories in consumer in our view, however, we maintain our Market Perform rating given the high relative valuation,” Herzog commented.

Latest Ratings for ELF

Nov 2019DowngradesBuyHold
Nov 2019MaintainsNeutral
Nov 2019MaintainsHold

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Posted-In: Bonnie Herzog Wells FargoAnalyst Color Reiteration Analyst Ratings


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