What Happened:

Shares of cosmetics company e.l.f. Beauty (NYSE:ELF) fell 7.8% in the morning session after Bank of America analyst Dara Mohsenian downgraded the stock's rating from Overweight (Buy) to Equal Weight (Hold). The analyst added, "With the stock nearly tripling since early 2023 and up 10x since the beginning of 2020, the Bull-Bear skew is now slightly negative, which is rare for this growth stock, and we believe valuation reflects outsized growth in the business."

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy e.l.f.? Access our full analysis report here, it's free.

What is the market telling us:

e.l.f.'s shares are not very volatile than the market average and over the last year have had only 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

e.l.f. is up 9.7% since the beginning of the year, and at $153.43 per share it is trading close to its 52-week high of $163.93 from January 2024. Investors who bought $1,000 worth of e.l.f.'s shares 5 years ago would now be looking at an investment worth $18,806.

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