Oppenheimer Reiterates Outperform on Sally Beauty Holdings (SBH) After Meeting with Management
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Oppenheimer reiterated an Outperform rating and $35.00 price target on Sally Beauty Holdings (NYSE: SBH) after meeting with senior management. Commentary from management suggests disruptions related to in-store resets, problems with its former email vendor, and marketing missteps are now behind the Sally Beauty segment. The company sees prospects for further gross margin expansion going forward from initiatives including coupon stacking, tactical pricing, and global sourcing.
Analyst Rupesh Parikh commented, "Yesterday, we met with senior management of Sally Beauty Holdings (SBH) in Denton, TX, including CEO Chris Brickman and CFO Mark Flaherty. The company does not discuss business trends intra-quarter. Overall, we walked away still confident in the potential for a turn at the Sally Beauty segment, but the precise timing remains unclear. Commentary suggests the company is now past the disruptive actions and increasingly focused on driving stronger BCC and List customer growth. On the P&L front, the company remains focused on driving gross margin expansion to offset continued labor cost pressures and investments. On the macro front, commentary suggests a stable consumer and competitive environment, and still healthy industry growth in core categories. We continue to view the risk/reward in SBH shares as attractive at current levels. Given the recent marketing missteps, the turn is unlikely to move in a straight line. We highlight five key takeaways below and await the introduction of FY17 guidance. We remain confident in our $1.85 estimate."
Shares of Sally Beauty Holdings closed at $26.71 yesterday.
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