Morgan Stanley on Sally Beauty Holdings Inc.

In a research note released Monday, Morgan Stanley analyst Simeon Gutman initiated coverage on Sally Beauty Holdings Inc. SBH with an Overweight rating and a price target of $30. The analyst believes that the company's risk to reward ratio is upward of 20 percent, this potential is due to growth re-accelerating over the next few quarters. In addition, easy compares, improved marketing, and management changes, all represent positive growth catalysts. The company is currently showing growth of 7 percent comps and growth in the mid-20s for earnings per share growth. In the future, the analyst expects the company to show growth of two to three percent comp growth and an increase of 13 to 14 percent in earnings per share growth. Furthermore, the analyst believes that the near-term set up is favorable, as residual benefits from new products and easing top-line comparisons are helping. As for management, Gary Winterhalter will still remain on the Board going forward and Mr.Brickman will take his place as chief executive officer. Shares of the company are up 1.75 percent today and are down 17.37 percent year-to-date.
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