Bank of America sees more upside ahead for e.l.f. Beauty ( NYSE: ELF ), advising the company should continue to grow its market share in a “Buy” initiation on Wednesday.
A team of analysts led by Anna Lizzul said that despite inflationary pressures and concerns on margins, the company should be able to “innovate with premium quality product offerings at affordable prices.” Thus far, price increases are not impacting demand, Lizzul said.
“Volumes remain strong despite recent price increases, and ELF has significant whitespace opportunity to increase shelf space with distributors,” she said. “ELF has an attractive business model with a scalable supply chain, without need for significant capital to fund its manufacturing.”
To be sure, Lizzul’s team raised caution on the company’s third-party suppliers in China amid geopolitical tension and supply chain concerns. However, the strong volume growth, pricing gains, and market share momentum were indicated as factors allowing the bull case to remain strong despite the notable downside risk.
Lizzul assigned a $45 price target to the stock alongside a “Buy” rating. Shares rose just under 1% in premarket trading on Wednesday.
Read a more cautious perspective from Cowen .
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Bank of America sees e.l.f. Beauty in ‘prime position’ to gain market share