Olaplex (OLPX) shares gained more than 5% today after Barclays upgraded the company to Equalweight from Underweight.
The bank believes that Olaplex can stabilize its business, which will likely limit further downside in the stock to some extent. However, they also find it challenging to see significant stock appreciation from this point. One of the key questions for Barclays is how EBITDA margins will ultimately shake out – in other words, how much more will the company need to spend to consistently grow in line with the prestige hair care category?
“For 2024, our Adjusted EBITDA estimate of $168 mm is ~$17 mm below consensus estimates (we are modeling +8% growth YoY vs. consensus +14%). We are hopeful that the company will be able to provide some degree of guardrails with respect to 2024 when it reports 3Q23 results in November,” mentioned Barclays.