ELF Should I Buy

Evercore ISI analyst Javier Escalante initiated coverage of Elf Beauty with an In Line rating and $68 price target. The company is evolving from a disruptive make-up brand into a multi-category platform that is increasingly open to M&A but it lacks a share-gaining core business to substantiate that platform narrative, the analyst tells investors in a research note. The Rhode deal obscures the near-term math but the Street continues to model double-digit sales growth over the next two years while the management continues to emphasize runway in the U.S. growth despite signs of saturation and slowing shelf productivity, the firm notes. Evercore adds that the core makeup business is becoming structurally less attractive as the channel mix shifts online and cyclical pressures contribute to this slowdown.