Olaplex Holdings: Hold Rating Amid Early Turnaround Signs and Macroeconomic Challenges

Morgan Stanley analyst Dara Mohsenian maintained a Hold rating on Olaplex Holdings (OLPX – Research Report) today and set a price target of $1.75.

Dara Mohsenian has given his Hold rating due to a combination of factors related to Olaplex Holdings’ current financial performance and market conditions. The company showed positive signs with a better-than-expected first quarter, including a 3.9% revenue increase and a 15% EBITDA improvement compared to consensus. However, despite these gains, Olaplex maintained its full-year guidance, indicating a cautious approach amidst ongoing macroeconomic uncertainties.
While Olaplex’s brand refresh and marketing strategies have started to yield results, particularly in North America, the company still faces challenges, such as declining sales in international markets and a decrease in direct-to-consumer sales. Additionally, the adjusted gross margin fell by 240 basis points year-over-year, reflecting inefficiencies from new innovations not yet fully scaled. These factors, combined with potential macroeconomic risks due to the premium pricing of Olaplex’s products, suggest that the company’s turnaround is still in its early stages, justifying the Hold rating.

In another report released yesterday, TD Cowen also maintained a Hold rating on the stock with a $1.80 price target.