Sally Beauty (SBH) rose Tuesday after a pair of analysts upgraded the beauty supply retailer to outperform and raised their price targets.
Shares of the Denton, Texas, company at last check were 12% higher at $21.77. They were up 49% in 2021 through the close of Monday's trading.
Cowen analyst Oliver Chen upgraded the company from market perform and raised his price target to $30 from $28.
"We believe that favorable hair and salon trends and Sally Beauty's structural modernization efforts should ultimately yield improved brand awareness and earnings growth," Chen said.
Sally Beauty, Chen added, benefited from COVID-19 induced do-it-yourself at-home trends, "yielding about 20% color category growth.
"[But] we believe Sally Beauty is emerging from the pandemic as a stronger retailer through enhanced digital offerings, improving store experience on rehabs, and strategic store closures."
Chen said "continued demand for coloring, particularly Vivids, will drive Sally Beauty Systems' comp growth."
"Vivid demand retains and attracts younger customers, while also having a positive halo impact on Sally's hair care category," he said.
In addition, Oppenheimer analyst Rupesh Parikh upgraded Sally Beauty to outperform from perform with a $24 price target.
The over 20% pullback in the shares from recent May highs creates an attractive entry point for "value players," Parikh said in a research note.
The analyst said Sally Beauty has sustainable earnings per share power in at least the $2.35 range.
The company is gaining traction with key initiatives, which could fuel upside to [Wall] Street forecasts longer term, Parikh said, calling Sally Beauty "a favorite value play."