Zacks Investment Research upgraded shares of Regis Corp. (RGS) from NEUTRAL to OUTPERFORM on July 17, 2012, with a target price of $21.00.
Regis has been experiencing slower traffic due to economic concerns, which remained a drag on same-store sales. However, its effective cost-saving initiatives, installation of the new POS and CRM system, "Regis Reignited" initiative, economies of scale and incremental salon closures will likely boost the earnings going forward. Moreover, we remain optimistic about the appointment of new CEO and expect him to play a key role in the improvement of business. In addition, we remain positive on Regis' stake sale in Provalliance as well as the divestiture of Hair Club, as both the deals will enable it to focus on enhancing salon experience by offloading non-core assets. The company also has a proven track record of growth through acquisitions and unit expansions. Furthermore, impressive balance sheet and cash position along with enhancement of shareholder value augur well. Hence, we upgrade our rating on the stock from Neutral to Outperform.
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