Street View: Olaplex's forecast cut puts near-term growth in question

Olaplex Holdings

19/10/2022 13:43

** Hair products maker Olaplex Holdings  OLPX.O  on Tuesday
cut its annual sales and profit forecast, citing a slowdown in
demand, increased discounts and a moderation in customer
acquisition amid inflation
    ** Shares of OLPX down ~45% at $5.39 in premarket trading
    NEXT 12 MONTHS DIFFICULT
  
        ** JP Morgan ("underweight"; PT: $8) believes that OLPX
will face challenges in the four quarters ahead with
deceleration in sales performance in fiscal 2022 Q3, followed by
negative sales growth in Q4
    ** Says increasing competition and excess inventory at OLPX
and other retailers will be a significant headwind over the next
12 months
    ** Piper Sandler ("neutral"; PT: $8) also notes that
competition is getting too fierce and OLPX is facing the
pressure, adding that the professional segment is facing greater
challenges than expected in "acquiring new customers amidst
volatile macro backdrop"
    ** Jefferies ("hold"; PT: $6) says while entering fiscal
2023, it expects salon channel to face similar challenges as
seen in past economic downturns, adding that early indicators of
such a trend include longer wait times between visits, among
others
    ** Evercore ISI ("in line"; PT: $10) says "given increased
risk of a business model that's integrated weaker, small
businesses like hair salons – we simply do not know how such
model would operate under the stress of a recession"
 (Reporting by Granth Vanaik in Bengaluru)
 ((Granth.Vanaik@thomsonreuters.com;))