Citigroup has upgraded e.l.f. Beauty to a Buy rating, citing a clear path to above‑peer growth and margin recovery. The cosmetics firm is projected to grow revenue at a 16% CAGR over the next three years, driven by market‑share gains at its core brand and the newly acquired rhode line.

Margin expansion is expected over the next 12 months as e.l.f. cycles China tariff impacts and lifts prices. Rhode, with an estimated 81% gross margin versus 71% for the core brand, adds higher profitability. Citi estimates the deal will be roughly 15% accretive to earnings per share.

After a 35% decline post‑Q2 2026 earnings, the stock sits at a $110 price target, valuing it at 18x FY27 EV/EBITDA. Investors see the pullback as a buying opportunity, while analysts anticipate a rebound in organic sales to double digits by FY27, driven by retail expansion in the US market.