Ulta Beauty Stock In Focus Ahead Of Q4 Earnings: Retail’s Bullish
Synopsis
In January, the company received a ratings upgrade from Morgan Stanley from ‘Equal Weight,’ to ‘Overweight.
Shares of Ulta Beauty Inc. (ULTA) have fallen nearly 6% in the past five days ahead of the company’s fisal fourth quarter earnings, but retail sentiment stayed strong.
Wall Street analysts expect Ulta to post earnings per share (EPS) of $7.13 on revenue of $3.47 billion.
The company is scheduled to post its Q4 and fiscal 2024 results on Thursday during after-market hours.
In January, analysts at Morgan Stanley upgraded Ulta’s rating to ‘Overweight’ from ‘Equal Weight,’ while hiking the price target to $500 from $430, according to The Fly. This implies an upside of nearly 52% from Wednesday’s closing price.
The brokerage expects above-average growth for the beauty industry in 2025, and sees a potential earnings and valuation upside as Ulta’s sales and margins expectations were “reasonable” for 2025.
Oppenheimer also added Ulta Beauty to the firm's "top pick" with an ‘Outperform’ rating and a $515 price target.
According to the brokerage, following the second positive update in recent months, it was increasingly confident in Ulta’s ability to sustain an operating margin of more than 12% over time and drive back toward a 3% to 4% comp.
According to Oppenheimer, Ulta remains under-owned and has a "very attractive setup" for further outperformance.
Sentiment on Stocktwits improved to ‘bullish’ from ‘bearish.’ Message volume climbed to ‘extremely high’ levels.
Ulta raised its Q4 outlook in January, reflecting stronger-than-expected performance during the holiday season. The company also appointed Kecia Steelman as its new CEO, replacing Dave Kimbell.
The company expects comparable sales to increase modestly and operating margin to be above the high-end of the company’s previous expected range of 11.6% to 12.4% in Q4.
Ulta Beauty, a retailer of cosmetics, fragrance, skincare ad hair care products, has more than 1,437 retail stores across 50 states.
Ulta’s stock is down 24% year-to-date.
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