Analyst Oliver Chen of TD Cowen maintained a Buy rating on Sally Beauty (SBH – Research Report), retaining the price target of $16.00.
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Oliver Chen has given his Buy rating due to a combination of factors including Sally Beauty’s attractive valuation and positive sales momentum. The company delivered comparable sales that slightly surpassed expectations, and gross margins showed improvement, which is crucial for profitability. Management’s confidence is reflected in their reiterated guidance for fiscal year 2025, expecting stable comparable sales and margins. Additionally, the company is making notable progress in deleveraging, maintaining a healthy financial discipline with its leverage ratio aligning within the target range.
Moreover, product innovation and strategic marketing enhancements are beginning to show promising results for Sally Beauty, as evidenced by stable transaction numbers and ticket sizes after a period of decline. The introduction of new brands like K18 in their Beauty Systems Group (BSG) segment bodes well for future growth. Although there are risks such as potential tariff impacts and economic pressures on consumers, the company’s focus on cost savings and value-driven strategies underpins the Buy rating.
Based on the recent corporate insider activity of 16 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SBH in relation to earlier this year.