Sally Beauty (SBH – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Oliver Chen from TD Cowen maintained a Buy rating on the stock and has a $13.00 price target.
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Oliver Chen has given his Buy rating due to a combination of factors including Sally Beauty’s compelling valuation and strong cost control measures. Despite a challenging macroeconomic environment and weaker sentiment in the beauty sector, the company has demonstrated robust financial discipline. The Fuel for Growth program is on track to generate significant cost savings, and Sally Beauty has maintained strong gross margins, which are above market expectations.
Additionally, the company’s leverage ratio is within its target range, indicating effective financial management. Although the company has lowered its FY25 guidance due to macroeconomic concerns, the modest valuation and potential for earnings growth make the stock an attractive investment. The combination of these factors supports the Buy rating, despite the lowered price target.