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Nomura Initiates Coverage Ulta Salon And Sally Beauty

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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

Jan 2018Morgan StanleyUpgradesEqual-WeightOverweight
Jan 2018Wells FargoUpgradesMarket PerformOutperform
Dec 2017BuckinghamUpgradesNeutralBuy

View More Analyst Ratings for ULTA
View the Latest Analyst Ratings

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


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