e.l.f Beauty (ELF) stock is plunging Friday after the cosmetics company reported mixed results for its fiscal 2025 third quarter and trimmed its full-year guidance.
In the three months ending December 31, e.l.f.'s revenue increased 31% year over year to $355.3 million, driven by strength in both its retail and ecommerce channels. Earnings per share (EPS) was flat compared to the year-ago period at 74 cents.
Results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $330 million and earnings of 75 cents per share, according to CNBC.
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"I'm proud of the e.l.f. Beauty team for delivering another quarter of consistent, category-leading growth," said CEO Tarang Amin in a statement, citing net sales growth as well as a market-share gain of 220 basis points in the U.S.
According to the CEO, Pinterest is "still in the early innings of unlocking the whitespace we see across digital, color cosmetics, skin care and international."
Friday's price action for ELF stock is about management's revised guidance. "Given softer-than-expected trends in January," said CFO Mandy Fields in e.l.f.'s earnings announcement, "we are taking a prudent approach and lowering our outlook for the final quarter of our fiscal year."
In an interview with CNBC, Amin said that because of Los Angeles wildfires and uncertainty around TikTok "social commentary was way down" during the first month of the calendar year.
The CEO also said management hasn't decided whether e.l.f. Beauty will raise prices to offset new 10% tariffs on China, where 80% of its supply chain is located.
The company now anticipates revenue of $3.27 to $3.32 per share, down from its previous forecast of $1.315 billion to $1.335 billion, and earnings of $3.47 to $3.53 per share.
As Fields explained, the updated forecast for 27% to 28% year-over-year growth in net sales represents a downward adjustment from 28% to 30% growth.
Is e.l.f. Beauty stock a buy, sell or hold?
Even before Friday's sell-off, ELF was underperforming the S&P 500, generating a loss of more than 46% vs a gain of more than 23% for the index over the trailing 12 months. But Wall Street is bullish on the consumer staples stock.
According to S&P Global Market Intelligence, the average analyst target price for ELF stock is $106.25, representing implied upside of more than 50% to current levels.
And the consensus recommendation is Buy, though analysts will continue to assess e.l.f. Beauty's recent sales trends as well as its market-share gains.
Financial services firm Oppenheimer, for example, reiterated its Perform rating (equivalent to a Hold) on the mid-cap stock following the earnings release.
"We would remain sidelined with ELF shares amidst upcoming comparisons, a slowing top-line growth trajectory, and ongoing uncertainty on the tariff front," wrote Oppenheimer analyst Rupesh Parikh.
The analyst continues to prefer Ulta Beauty (ULTA) over Estee Lauder (EL) and e.l.f. Beauty "in a more challenged beauty trade lately."
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