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Investing.com - Canaccord Genuity upgraded Olaplex Inc (NASDAQ:OLPX) from Hold to Buy and raised its price target to $2.00 from $1.50, citing brand reinvigoration and potential return to growth. The stock, currently trading at $1.40 with a market capitalization of $941 million, appears undervalued according to InvestingPro’s Fair Value analysis.
The research firm noted that Olaplex has experienced a "rollercoaster" journey since its IPO, initially growing at triple-digit rates to a $700 million+ annualized run rate before normalizing to its current $400 million+ level this year. InvestingPro data shows impressive gross profit margins of 71% and strong free cash flow yield, suggesting operational efficiency despite revenue fluctuations. Get access to 10+ additional ProTips and comprehensive analysis with an InvestingPro subscription.
After 2.5 years of normalization, Canaccord Genuity believes the prestige beauty brand is finally seeing sales and margins stabilize, with opportunities for more consistent growth as investments in marketing, merchandising, and innovation begin to yield results.
The firm highlighted that Olaplex’s second-quarter sales returned to growth, with potential for positive sales growth in fiscal year 2025.
Canaccord Genuity also observed that adjusted EBITDA margins are normalizing from previous levels exceeding 60% to a more industry-standard rate in the low-20% range.
In other recent news, Olaplex Holdings Inc. announced its second-quarter 2025 financial results, highlighting a mixed performance. The company reported a revenue of $106.3 million, which surpassed analysts’ expectations of $100.64 million, marking a 5.6% beat. This revenue increase of 2.3% year-over-year is notable as it represents the first positive sales growth for Olaplex in nine quarters. However, the earnings per share (EPS) fell short, coming in at -$0.0048 against the forecasted $0.0128, a surprise of -137.5%. Despite the EPS miss, investor sentiment appeared cautiously optimistic, as reflected by a slight rise in pre-market trading.
Canaccord Genuity responded to these results by lowering Olaplex’s stock price target from $2.00 to $1.50, citing margin pressure, but maintained a Hold rating on the stock. This adjustment reflects the company’s ongoing challenges despite exceeding sales expectations. These developments are important for investors to consider as they evaluate Olaplex’s financial health and market position.
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