In a research note released Monday, Morgan Stanley analyst Simeon Gutman initiated coverage on Sally Beauty (NYSE: SBH) with an Overweight rating and a $30 price target.
The analyst believes that the company's risk/reward ratio is upward of 20 percent, potentially due to growth re-accelerating over the next few quarters.
In addition, improved marketing and management changes all represent positive growth catalysts.
The company is currently showing growth of seven percent comps and growth in the mid-20s for earnings per share. In the future, the analyst expects the company to show growth of two percent to three percent comp growth and an increase of 13 to 14 percent in earnings per share growth.
Gutman believes that the near-term set up is favorable, as residual benefits from new products and easing top-line comparisons are helping.
Shares of Sally Beauty are up 1.47 percent.
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