Friday, Credit Suisse initiated coverage of Regis Corp. (RGS) stock with an Outperform rating and a price target of $16.
Analyst Lejuez noted that Regis has a simple, predictable business model, and management's recent decision to slow growth highlights the company's significant free cash flow generation and increases the likelihood of improving returns on capital.
In recent years RGS's unit growth was 7%-10%; beginning in 2010, the analyst expects 1%-3% unit growth, which fuels his forecast of about $100 million free cash flow, or FCF, in fiscal 2010, or 8% free cash flow yield. Excluding growth capex, the business would generate roughly $135 million in FCF, or an 11% free cash flow yield.
The analyst's Outperform rating and price target of $16 are based on his proprietary discounted cash flow-based HOLT analysis, which assumes asset growth consistent with store growth in his model, and CFROI improving from about 6% in fiscal 2010 to about 7% in 2014. The analyst expects management's focus on existing salons rather than growth will help drive higher returns.
The analyst believes the main risks are pressure on product sales and margins, resistance to service prices increases, weakness in its international business, and unsuccessful acquisitions.
Currently, RGS is up $0.08 or 0.60% and trading at $13.51.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.