Citi Analyst Praises Physicians Formula

The Azusa, Calif.-based company, which makes cosmetics sold at mass-market retailers such as Wal-Mart and Target, just launched its Organic Wear line of color cosmetics, which captured nearly 1 percent market share in the facial cosmetics category.

Analyst Wendy Nicholson said despite a tough comparison to 11.6 percent dollar sales growth in March 2007 in the total cosmetics category, Physicians Formula's dollar sales (as tracked by ACNielsen) for the four weeks ended March 22 grew 12.6 percent.

In the total cosmetics category, sales increased 5.6 percent, which compares to 2.8 percent growth in the prior four-week period and a 0.4 percent decline in the year-ago period.

"With FACE having just launched their new Organic Wear line of color cosmetics (supported by unprecedented levels of advertising), as well as numerous other new products, we believe that todays data represents the early signs of future market share gains and resulting dollar sales growth to come for FACE," Nicholson wrote in a note to clients.

She reiterated $14 target price on the company's shares. In afternoon trading, Physicians Formula shares rose 6 cents to $9.25.