Elf Beauty Analyst Praises Platform's Use Of TikTok In Upgrade

Since striking its nadir in 2019, e.l.f. Beauty Inc ELF has more than doubled in share price. Analysts still see room for improvement.

The Elf Beauty Rating

Piper Sandler analysts Erinn Murphy and Eric Johnson upgraded e.l.f. to Overweight with a $19 price target.

The Elft Beauty Thesis

Piper Sandler sees something pretty in the e.l.f. story. Foremost is its TikTok marketing campaign.

“According to industry contacts, 40% of TikTok users last year did not have an Instagram Account,” Murphy and Johnson wrote in a report. “In other words, engaging with consumers on TikTok is highly incremental.”

Because of its TikTok integration, the industry looks to e.l.f. as a marketing success story. Piper Sandler was also impressed by e.l.f.’s portfolio expansion and segmentation, as well as its fourth-quarter gains in earned media value (EMV).

“From what we can see through Tribe Dynamics, ELF's earned media value during the December quarter was up 51% Y/Y — the fourth consecutive quarter of strong DD gains,” the analysts wrote, noting underestimation of EMV, which excludes TikTok metrics. “To put this in context, the most prominent trending cosmetics brands (a basket of 54 other brands) saw EMV decline an average of 21% Y/Y in Q4.”

They anticipate continued market share gains in the near term as the rest of the beauty industry falters.