DA Davidson analyst Linda Bolton Weiser raised the price target on Buy-rated E.L.F. Beauty, Inc. (NYSE:ELF) from $176 to $178.

ELF's fiscal second-quarter revenue increased 76% year-over-year to $215.5 million, beating the estimate. The company reported earnings of 82 cents per share, which beat estimates of 51 cents per share.

Operating profit was +123% to $56.6 million, exceeding consensus of $38.8 million, analyst notes.

ELF has entered Douglas in Italy with great success, and more new country entries in the coming quarters are expected, as the company has built a team of more than 30 people in the U.K. to drive international expansion, writes the analyst.

ELF is rebuilding its inventory in FY24 to better meet demand, says the analyst.

ELF closed on its acquisition of Naturium for $355 million, consisting of cash and $72 million of ELF stock. After the acquisition, skincare represents about 18% of sales versus about 9% previously, notes the analyst.

The analyst writes that ELF's color cosmetics consumption in tracked channels increased 51% in Q2 FY24, far outpacing category growth of +3%.

ELF's skincare consumption in tracked channels was +129% Y/Y in the quarter, outpacing category growth of +10%. The company is ranked number 14 in mass skincare versus 19 a year ago, with its market share gaining 80 basis points to 1.6%.

Gross margin was 70.7% versus 65.0% in F2Q23 (consensus was 67.9%), due to FX, favorable mix, cost savings, lower inventory adjustments, and lower transportation costs, writes the analyst.

The analyst raised Q3 FY24 organic sales estimates to 35% from 24% previously and Q4 FY24 organic sales estimate to 21% from 10%.

Price Action: ELF shares are trading higher by 2.97% at $97.35 on the last check Thursday.