The negative catalysts for E.L.F. Beauty Inc ELF have played out and the company faces strong stimulus tailwinds, according to Piper Sandler.

The E.L.F. Beauty Analyst: Erinn Murphy upgraded the rating for E.L.F. Beauty from Neutral to Overweight, while raising the price target from $24 to $30.

The E.L.F. Beauty Thesis: Given the company’s value-oriented positioning, it is “one of the best ways to play stimulus to the lower to middle-income consumer,” Murphy said in the upgrade note.

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Murphyt also expects E.L.F. Beauty to benefit from the “Yearning To Go Out” trend.

“While we still expect ELF to invest handily to support a successful multi-brand strategy, we are encouraged by the latest launch, Keys Soulcare, is in all ULTA doors (and online). We estimate the initial sell-in for ELF could represent at least $3M,” the analyst wrote.

Murphy raised the earnings estimates for fiscal 2022 and 2023 from 70 cents per share and 74 cents per share and from 77 cents per share to 83 cents per share, respectively.

ELF Price Action: Shares of E.L.F. Beauty was trading almost flat at $26.33 at the time of publication Wednesday.

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