Olaplex Holdings Inc
Olaplex Holdings Inc
IBD Stock Analysis
- Working on IPO base with potential 28.84 buy point
- Boasts accelerating, triple-digit EPS and sales growth
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:44PM EDT on
Olaplex (OLPX) rebuilds broken bonds — the bonds that make up hair, that is. And it’s already profitable, unlike many new issues.
The Santa Barbara, Calif.-based company pioneered a type of hair treatment known as bond-building. Some hair-care products merely add shine to the outer layers. But Olaplex products claim to repair broken bonds that make up hair on the molecular level. They have, as a result, generated a cult following.
“Whether it’s in-salon services like chemical, bleaching and lightening, or environmental, mechanical and natural causes like aging — those cause your bonds to be damaged,” CEO JuE Wong told CNBC during a Sept. 30 interview. “What we do is we relink those broken bonds.”
Fans of Olaplex are willing to pay $8.48 per ounce for a value size bottle of its Hair Perfector Number 3, which is more than double the price of some competitors.
In 2020, the hair-care market totaled $77 billion globally. Between 2020 to 2025, it’s expected to grow at a compound annual rate of 6%, according to Statista.
Within it, premium hair care is among the fastest growing segments.
OLPX Stock Technical Analysis
Shares of Olaplex rose 4.6% to 25.91 on the stock market today, above the 10-day line. OLPX stock is working on a possible 27.74 buy point from its initial public offering or IPO base, according to MarketSmith chart analysis.
An extremely aggressive investors may have tried to start an Olaplex stock position on Tuesday.
It debuted on the stock market Sept. 30, after the OLPX IPO raised $1.5 billion, pricing above the expected range at $21.
OLPX stock’s IBD Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score, is 68 out of 99, which is decent for an IPO.
With such a short history, other key IBD ratings are either missing or must be seen in context.
For example, it lacks an Acc/Dis Rating as yet. And it earns a Relative Strength Rating of 40 out of a possible 99. But the RS rating tracks a stock’s performance against all stocks in the past year, and Olaplex hasn’t been around that long.
The cosmetics/personal care group, to which Olaplex belongs, ranks a dull 143 out of 197 industry groups tracked by IBD, according to IBD Stock Checkup. It also includes L’Oreal (LRLCY), whose Redken brand offers hair bonding products. So does Henkel‘s (HENKY) Schwarzkopf brand. Beauty chain Sephora, owned by LVMH (LVMHF), and Nordstrom (JWN), both stock Olaplex products.
Olaplex Earnings and Fundamentals
The new IPO stock has yet to issue its first earnings report as a publicly traded company. There are no earnings or revenue estimates for Olaplex yet on FactSet. Nor are there any analysts covering OLPX stock yet.
But an IPO filing showed that Olaplex earnings reached 11 cents a share in the quarter ended June 30 vs. EPS of 3 cents a year earlier.
According to FactSet, Olaplex nearly doubled sales to $282.2 million in fiscal 2020. It grew free cash flow 145% in the same period. And direct-to-consumer sales accounted for more than a quarter (27%) of total revenue.
Free cash flow measures how much cash is generated after investing in the business. It’s a measure of a company’s profitability.
Olaplex has signaled an interest in entering other beauty categories, such as skin care.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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