Elf Beauty (NYSE:ELF) shares moved lower on Monday after the company released the first detailed information following its recent acquisition of Hailey Bieber’s beauty brand Rhode.
Prior to the release, investors knew only that Rhode generated $212 million in annual sales for financial year 2025 and was accretive to gross margin, operating margin, and adjusted EPS, but the level of accretion and recent growth trajectory were largely unknown.
According to UBS analysts, the new financials show that the acquisition is roughly 11% accretive to Elf’s 2025 EPS, or about $0.38 per share.
The analysts highlighted Rhode’s strong profitability, noting that the brand’s approximately 33% operating margin compares favorably to Elf’s trailing 12-month margin of approximately 19%, supporting “healthy margin accretion consistent with management’s prior remarks.”
Despite the EPS boost, UBS described the initial market reaction as mixed.
June quarter sales of roughly $40 million were likely “below what the buyside was expecting,” given the $212 million annual sales figure, suggesting that underlying direct-to-consumer momentum may not be as strong as many had hoped.
They also noted that sales can be lumpy due to product launch timing. Rhode’s six-month figure of $103 million implies over $60 million in the March quarter, and there was nothing unusual flagged by the company about the June quarter.
UBS maintains a ‘Neutral’ rating on Elf with a 12-month price target of $150.
The analysts noted that while investors may be somewhat disappointed by the June sales figures, this is unlikely to “fully derail the bull case” given optimism around the brand’s launch in Sephora stores.
Shares of Elf traded down about 7% at $127 on Monday afternoon.