Olaplex Holdings Outlook: Caution Amid Weak Technicals and Mixed Analyst Sentiment

Market Snapshot

Headline Takeaway: Olaplex Holdings (OLPX.O) is in a weak technical position with bearish signals dominating, despite moderate recent price gains. Stance: Caution advised.

News Highlights

Recent news affecting the beauty and personal care sector includes:

• Indian beauty retailer Nykaa posted a significant profit increase in Q4, driven by rising demand for premium products. While not directly impacting OLPX, it reflects a positive trend in the beauty retail space.
• ZEBRA launched a new line of non-toxic lip gloss, expanding into the beauty market. This aligns with consumer trends OLPX may face in terms of product safety and sustainability.
• Edgewell Personal Care reported Q2 earnings that missed forecasts, and its stock dropped. This highlights the fragility of the sector, which OLPX shares exposure with.

Analyst Views & Fundamentals

Analysts remain divided, with a simple average rating of 3.00 and a performance-weighted rating of 3.47. The ratings are not consistent, indicating some uncertainty about the company's future trajectory.

Despite this, the stock has seen a 0.75% price increase recently, suggesting some optimism. However, the fundamental model score is a weak 0.34, suggesting a need for deeper scrutiny of the company’s financial health.

• Revenue-MV factor: Value = -0.01 (internal diagnostic score: 2.00)
• Net profit margin (%): Value = 1.21% (internal diagnostic score: 1.00)
• Current liabilities / Total liabilities (%): Value = 18.18% (internal diagnostic score: 1.00)
• Net cash flow from operating activities / Operating revenue (%): Value = 8.18% (internal diagnostic score: 2.00)
• Profit-MV: Value = -1.64 (internal diagnostic score: 2.00)
• Cash-MV: Value = -0.35 (internal diagnostic score: 1.00)

Money-Flow Trends

Fund flows show mixed signals. While medium and large investors are showing some positive inflow, overall and retail (small) flows remain negative.

• Small inflow ratio: 48.42% (trend: negative)
• Medium inflow ratio: 50.25% (trend: positive)
• Large inflow ratio: 55.14% (trend: positive)
• Extra-large inflow ratio: 48.72% (trend: negative)

This suggests that big money is cautiously optimistic, but retail sentiment remains bearish. The overall fund flow score is 7.36 (score level: good), showing that institutional money is still flowing in despite the technical bear case.

Key Technical Signals

Technically, OLPX.O is showing weak momentum, with 0 bullish indicators and 5 bearish indicators over the past 5 days. The technical score is 2.2 (internal diagnostic score: weak).

• WR Overbought: Score 2.51 (internal diagnostic score) – suggests potential overbought conditions
• Long Upper Shadow: Score 2.95 – neutral bias
• Three Black Crows: Score 1.09 – strongly bearish
• Bullish Harami Cross: Score 1.62 – biased bearish despite the name
• Marubozu White: Score 2.81 – neutral bias

Recent chart patterns from 12/16 to 12/23 include:

• Dec 16: WR Overbought
• Dec 17: Bullish Harami Cross
• Dec 19: Three Black Crows
• Dec 22: Marubozu White
• Dec 23: Long Upper Shadow

These signals suggest increasing bearish pressure, with Three Black Crows being particularly bearish in traditional candlestick analysis.

Conclusion

Backtest the performance of buying OLPX.O with WR Overbought, selling at first close below 50-day moving average, from 2022 to now.

Olaplex Holdings is under technical pressure with no bullish signals and five bearish indicators, while analyst sentiment is mixed and fundamentals are weak. Despite moderate price gains, the fundamental model score is very low (0.34), and technical strength is at 2.2.

Actionable Takeaway: Consider waiting for a clearer breakout or significant news event before entering long positions. Watch for the upcoming earnings and sector trends, as these could offer new direction.