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Wells Fargo analysts raised their rating on the stock to equal weight, which is their version of a neutral or hold rating. They also set a price target of $525, which is slightly below where the stock trades today.
This move suggests the firm sees less risk of the stock falling further than it did previously. While the new target is lower than the average analyst target of $625, the upgrade itself shows a shift toward a more stable outlook for the business after a period of caution.
Source: Wells Fargo
New data shows that US retail sales grew more than expected in August, with 12 out of 13 categories reporting gains. This broad spending was helped by back-to-school shopping and suggests that consumers are still willing to spend on discretionary items like beauty products.
For a retailer like Ulta, this is a positive sign that the wider economy is holding up. While higher gas prices can sometimes squeeze household budgets, the steady growth in retail spending indicates that shoppers are not yet pulling back on the everyday luxuries that drive Ulta's sales.
Source: Bloomberg Markets and Finance
Ulta reported earnings of $6.55 per share, which was higher than the $6.20 analysts expected. Sales at stores open at least a year grew about 4 percent. While this is slower than the 7 percent growth seen last year, it shows the company is still winning more business even as shoppers become more careful with their spending.
Management is confident enough in the business to raise its full-year targets and increase its stock buyback plan by 300 million dollars. Buybacks happen when a company uses its own cash to buy its shares from the market, which makes the remaining shares more valuable. This suggests the company sees its own stock as a good investment right now.
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Source: 8-K filing
Ulta Beauty is scheduled to report its quarterly results today. Analysts expect the company to earn about $6.20 per share on roughly $2.99 billion in revenue. The company has a history of performing well, having topped analyst targets in six of the last eight quarters.
For a long-term owner, the most important numbers will be comparable sales growth and loyalty member activity. We are watching to see if sales at existing stores can maintain the 3 to 5 percent growth needed to show Ulta is still winning customers from general retailers. We also want to see if its loyalty program, which has over 45 million members, continues to drive the vast majority of its sales.
Deutsche Bank slightly raised its target for the stock from $692 to $695 while keeping its buy rating. This move comes just before the company reports its latest quarterly results. The new target is well above the average analyst target of $649 and the current price of about $543.
Source: Deutsche Bank
Management consistently sets a bar they can clear, beating profit expectations in seven of the last eight quarters. This track record suggests their forecasts are reliable and they have a firm grip on their costs.
| Expectation | |
|---|---|
| EPS | $5.60 |
| Revenue | $2.99B |
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