10:55 AM EDT, 05/29/2025 (MT Newswires) -- E.l.f. Beauty's (ELF) decision to acquire Hailey Bieber's Rhode and better Q1 consumption trends will drive positive momentum for the company, BofA Securities said in a Thursday research note.

Rhode acquisition offers ELF considerable distribution opportunity and is expected to complement its gross margin, earnings, and earnings before interest, taxes, depreciation, and amortization margin, according to the note.

Rhode acquisition, expected to close in fiscal Q2, will also help ELF's relationship with Gen Z consumers who seek prestige-level products, the analysts wrote.

While the company did not provide fiscal 2026 guidance amid a dynamic tariff landscape, the brokerage said it expects gross margin improvements from price increases, cost savings, and supplier concessions.

e.l.f. Beauty's global expansion and shelf space gains are further supported by its portfolio diversification across cosmetics and skincare products, according to BofA. The brokerage increased its fiscal 2026 and 2027 EPS estimates to $3.95 and $4.69, respectively.

BofA Securities reiterated its buy rating on the stock and increased its price target to $113 per share from $95.

Shares were up over 25% in recent trading.

Price: 113.47, Change: +22.97, Percent Change: +25.38