UPDATE: Bank of America Upgrades Sally Beauty Holdings to Buy on Growth and Cash Flow Upside

Bank of America raised its rating on Sally Beauty Holdings

from Neutral to Buy and increased its price objective from $30 to $32. Bank of America said, "We are upgrading SBH to Buy from Neutral and raising our price objective to $32 from $30, based on 19x our new CY13 est. SBH is a rare example of a domestic growth story with defensive characteristics, i.e. recession resistant with minimal FX risk. For 2H12, we forecast comps, revenue, and EPS growth of 6%/8%/29%, respectively, and with leverage down to 2.3x EBITDA, we see buybacks and a possible dividend, given SBH's 100% 3yr FCF conversion. SBH repurchased $200m of stock in FQ3 from CD&R, complimenting an already well established sales and margin story. CD&R now holds just 12% of shares, leading us to believe that most of the overhang risk is now in the past." Sally Beauty Holdings closed at $26.53 on Thursday.