What Happened?

Shares of beauty supply retailer Sally Beauty (NYSE:SBH) jumped 11.9% in the afternoon session after TD Cowen analyst Oliver Chen upgraded the stock's rating from Hold to Buy and raised the price target from $14 to $16. The analyst highlighted SBH's "modest valuation" and consistent comps. Chen also cited SBH's "hair color and care category leadership and innovation, marketing and store enhancements, and attractive free cash flow to drive further debt reduction and upside from buybacks.".

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What The Market Is Telling Us

Sally Beauty’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for Sally Beauty and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 4 months ago when the stock gained 12.7% on the news that the company reported strong second quarter earnings results. Sally Beauty beat analysts' EPS expectations. Its revenue also outperformed Wall Street's estimates. The company maintained its previous full year guidance, calling for "net sales and comparable sales to be approximately flat compared to the prior year". Overall, this quarter was quite solid.

Sally Beauty is up 8.8% since the beginning of the year, and at $14.46 per share, has set a new 52-week high. Investors who bought $1,000 worth of Sally Beauty’s shares 5 years ago would now be looking at an investment worth $790.75.

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