The Denton, TX-based beauty supplies retailer is projected to outperform compared to other retailers regardless of U.S. market conditions, Oppenheimer said in a note.
"We look favorably upon the potential for management initiatives to turn around the performance of the Sally Beauty segment," the firm added. "Early reads on new studios and remodels are positive. Key changes to hair care and hair color are still to come and may be the most impactful to turn comparative sales momentum."
Oppenheimer analysts forecast that Sally Beauty's comparative sales will rise 2.5% during fiscal 2016 and climb by 3% during fiscal 2017.
The company is now one of Oppenheimer's top picks, joining other companies including Kroger (KR) and Ulta Salon, Cosmetics & Fragrance (ULTA).
Sally Beauty stock is down by 0.19% to $25.67 in pre-market trading on Tuesday.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.
You can view the full analysis from the report here: SBH