Market Overview

Nomura Initiates Coverage Ulta Salon And Sally Beauty

Related ULTA
Technical Alert: Ulta Salon Soars After Raised Guidance
Jim Cramer: There Is A Lot Of 'Negativity' And 'Suboptimal' News In The Market
Related SBH
Amazon Is Taking Over The Market, One Sector At A Time
Managers Forced To Buy Sally Beauty After Added To S&P MidCap 400 Index

Normura initiated coverage with Neutral ratings on Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA) with a $126 price target and Sally Beauty Holdings, Inc. (NYSE: SBH) with a $32 price target on Friday.

Analyst Simeon A. Siegel expected “Ulta to post LDD to mid-teens sales growth amid a challenged retail environment, given growing brand awareness, analytically charted store expansion, a multiyear comp waterfall, increased loyalty growth, and increasing omni-channel capabilities.”

Siegel awaited a better entry point on the stock. The price target of $126 was based 25x the firm’s FY16 EPS estimate of $5.36 discounted back one year.

Siegel expected ongoing comp and EPS consistency in Sally Beauty, however, “with the shares up 20 percent in the last six months (vs S&P 500 up 4.3 percent), SBH has been on an impressive run, with expectations baking in (as-yet-to-occur) reacceleration in top- and bottom-line trends.”

“Although we believe SBH is a compelling long-term value, we believe the shares may take a pause in the near term, and we await a better entry point,” according to the analyst note.

The $32 price target on SBH was based on 17x the firm’s FY15E EPS of $1.71.

Sally Beauty recently traded at $30.05, down 1.89 percent.

Ulta Salon, Cosmetics & Fragrance recently traded at $131.93, down 0.23 percent.

Latest Ratings for ULTA

Aug 2016Deutsche BankMaintainsHold
Aug 2016JefferiesMaintainsHold
Aug 2016BairdMaintainsOutperform

View More Analyst Ratings for ULTA
View the Latest Analyst Ratings

Posted-In: Nomura Simeon A. SiegelAnalyst Color Price Target Initiation Analyst Ratings


Related Articles (ULTA + SBH)

View Comments and Join the Discussion!