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On Monday, Piper Sandler reiterated its positive stance on Sally Beauty Holdings (NYSE:SBH), maintaining an Overweight stock rating and a $15.00 price target. The firm also reaffirmed Sally Beauty as a Top Idea after conducting its first-quarter 2025 Hair Salon Survey. According to InvestingPro data, the company has achieved a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency.
In the survey, Piper Sandler gathered insights from 161 stylists across the United States. The results indicated that while January showed signs of softness as described by the company’s management, the overall trends did not appear significantly worse. The analysts noted several positive factors that could support Sally Beauty’s performance in the second half of the fiscal year, including the launch of the K18 hair care product, which has been well-received according to the survey responses.
The research firm highlighted that despite Sally Beauty’s stock remaining within a tight trading range following the first fiscal quarter results, the company’s management guidance is prudent. Piper Sandler expressed confidence that the company’s revenue and profit and loss execution would continue to yield healthy returns. This optimism is supported by the stock’s attractive valuation metrics. InvestingPro analysis shows the stock trading at a P/E ratio of 5.42x, with a healthy gross profit margin of 51.03% and strong liquidity demonstrated by a current ratio of 2.27. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued. Discover 12 more exclusive insights about SBH with an InvestingPro subscription, including detailed valuation metrics and comprehensive Pro Research Reports.
Piper Sandler’s continued endorsement of Sally Beauty comes as the company is set to implement several drivers that could help it meet or exceed its financial guidance. The firm also pointed out ongoing cost savings initiatives that are expected to contribute to the company’s financial health.
The analyst’s commentary emphasized the compelling investment case for Sally Beauty, citing the potential for the company to achieve or surpass its financial targets. The combination of these factors, along with the product launches and cost-saving measures, forms the basis of Piper Sandler’s continued recommendation of Sally Beauty as a top stock pick.
In other recent news, Sally Beauty Holdings reported its first-quarter 2024 earnings, meeting expectations for earnings per share (EPS) at $0.43, marking a 10% increase year-over-year. However, the company fell short on revenue, reporting $937.9 million compared to the $943.33 million forecast. Despite these mixed results, Sally Beauty maintained its full-year guidance for comparable sales, projecting a flat to 2% increase. DA Davidson adjusted its outlook on Sally Beauty by reducing the company’s price target to $10.50 from $13.00, while maintaining a neutral rating. The adjustment followed Sally Beauty’s first-quarter fiscal year 2025 sales and operating profit, which did not meet expectations, and a downward revision of its FY25 sales guidance due to foreign exchange factors. The firm expressed concerns about Sally Beauty’s ability to meet its full-year guidance given the challenging comparisons and a slow start to the second quarter. Additionally, Sally Beauty’s e-commerce sales saw a 9% growth, reaching $99 million, and the company reported a gross margin improvement of 60 basis points to 50.8%. The company continues to focus on strategic initiatives, including new product launches and expanding its e-commerce capabilities.
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