Zacks Investment Research downgraded shares of Regis Corp. (RGS) from OUTPERFORM to NEUTRAL on August 29, 2012, with a target price of $19.00.
Regis Corp.'s new CEO is taking all the measures to turnaround its business. Moreover, its cost-saving initiatives, installation of the new POS and CRM system, "Regis Reignited" initiative, economies of scale, impressive balance sheet position and unit expansion will likely boost earnings going forward. In addition, Regis' stake sale in Provalliance as well as the divestiture of Hair Club remains encouraging, as both the deals enables it to focus on enhancing salon experience by offloading non-core assets. However, persistent sluggishness in traffic due to economic concerns, remain a drag on same-store sales. Additionally, a challenging UK retail environment and lingering risks from fashion changes add to the woes. Furthermore, the absence of 2013 guidance until the new CEO completes the evaluation of business indicates lack of visibility in the near term. Hence, we downgrade our rating on the stock from Outperform to Neutral.
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