Elf Beauty's (ELF) upcoming expansion of its Rhode makeup and skincare brand at Sephora locations in Europe is expected to see Sephora overtake Amazon.com (AMZN) in terms of retail sales for Elf on a total company level, BofA Securities said Tuesday.
Late last month, Rhode said it will be available at Sephora in 19 new European countries Sept. 30. This would follow the brand's 2025 rollout with Sephora in the US, the UK, and Canada.
"The Sephora Europe expansion will bring Rhode's footprint to approximately 40% of Sephora stores globally," BofA analyst Anna Lizzul said in a note to clients Tuesday. "We expect Sephora to overtake Amazon in terms of retail sales for Elf on a total company level after the Sephora Europe launch, which would make Sephora Elf's third largest retail partner."
The investment firm expects Rhode sales per Sephora location to match Target (TGT) store levels because of the brand's higher price point despite a smaller footprint. The brokerage sees an opportunity for Sephora Europe to contribute $150 million to $200 million in annual Rhode sales over time.
"The pipeline build for Rhode's expansion into Sephora will be captured in (fiscal second quarter)," the analyst wrote. A year earlier, Elf didn't capture the entire pipeline build from the Sephora sell-in for launch in 2025 given the close of the brand's acquisition in August of that year, according to the note.
The company generates just over 20% of its sales internationally, well below beauty peers that derive more than 70% of sales from outside the US, BofA said. Beyond Rhode's Sephora Europe launch, the company is expanding its Elf and Naturium brands internationally, with Naturium continuing its Sephora rollout in Canada and Mexico this fall after launching in Australia and New Zealand in October, the brokerage added.
BofA raised its price objective on the Elf stock to $118 from $100 while reiterating its buy rating.
The brokerage now projects the company's fiscal 2027 earnings and revenue at $3.83 a share and $2.02 billion, respectively, up from its prior outlook of EPS of $3.64 on sales of $1.97 billion. Analysts polled by FactSet expect $3.62 and $1.97 billion, respectively.
Elf shares were up 0.3% in Tuesday afternoon trade, bringing its year-to-date gains to nearly 28%.
In August, the company raised its fiscal 2027 guidance after its first-quarter results topped Wall Street's estimates. Personal care and home fragrance retailer Bath & Body Works (BBWI) lifted its full-year earnings outlook following a fiscal second-quarter beat amid tariff refund tailwinds, while cosmetics maker Estee Lauder (EL) bumped up its full-year operating margin outlook.
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