The downgrade to Equal-Weight suggests that Morgan Stanley believes e.l.f. Beauty is now fairly valued and may not outperform the market as it previously expected. However, the increase in the price target to $168 implies that the analyst sees some potential for the stock to grow from its current price, albeit at a pace that aligns with market performance. This mixed sentiment could lead to a neutral short-term impact on the stock as the market digests both the downgrade and the raised price target.