DA Davidson says Nielsen POS update ‘not awful but not great,’ keeps buy on Elf

Keeping a Buy rating and a price target of $223 on Elf Beauty, DA Davidson says that ideally, the firm would like to see point of sale growth re-accelerate to +20% as prior-year comps ease. With Nielsen tracked POS update, “we did see an acceleration in the last week” to +16.8% year-over-year from +14.7% year-over-year in the preceding week, but 2-year stack decelerated a bit, DA Davidson notes. Prior-year comps dip into the +40% range starting in a few weeks, and if 2-year stack can be maintained, that implies year-over-year POS growth could re-accelerate to over 20%, it adds. The firm points out that trading could be rocky until one sees POS re-acceleration. DA Davidson thinks Elf Beauty should be able to beat Q2 2025 consensus, but the magnitude of upside and guidance raises could be smaller. The shares have dropped over 6% to $140.63 in afternoon trading.