Shares of Ulta Beauty Inc (NASDAQ:ULTA) were trading lower on Wednesday, despite the company on Tuesday reporting upbeat first-quarter results.
Here are some key analyst takeaways:
- DA Davidson analyst Michael Baker maintained a Buy rating, while slashing the price target from $650 to $585.
- Guggenheim Securities analyst Steven Forbes reiterated a Neutral rating on the stock.
Check out other analyst stock ratings.
DA Davidson: Ulta Beauty reported beats on comps, gross margins, and earnings, with several drivers "moving in the right direction," Baker said in a note. He added that the positives in the quarter included:
- Comps of 5.3% beat consensus of 4.6%.
- Comps were driven by both ticket and traffic.
- Two-year comps accelerated to 8.2%, from 7.3% in the previous quarter and was the best in two years.
- Gross margins expanded by 100 basis points (bps), topping the estimate of a 10-bps improvement.
- Gross margins were helped by "better shrink, inventory sell through, mix, and efficiencies," which offset higher fuel costs.
"It wasn't a perfect quarter as the monthly comp trend slowed through the quarter," the analyst wrote.
Management raised their full-year guidance by less than the first-quarter beat, with earnings being revised higher backed by more buybacks, Baker stated. This made Ulta Beauty among the few companies to deliver a beat on both sales and profits this quarter and raise guidance, he further noted.
Guggenheim Securities: Ulta Beauty's operating results broadly exceeded expectations, Forbes said. The company's net sales grew more than expected, by around 11.1%, "led by market share gains in prestige and with a relatively flattish mass share performance," he wrote.
Newness and core assortment growth made "meaningful contributions" to Ulta Beauty's sales, the analyst stated. Management’s commentary for the second quarter likely suggests 1.5%-2.0% comps growth, setting the path to mid-single digit EBIT growth during the back half of 2026, which "likely requires ULTA delivering SG&A expense leverage on an ~3% comp," he further wrote.
ULTA Price Action: Ulta Beauty shares were down 1.47% at $464.30 at the time of publication on Thursday. The stock is near its 52-week low of $452.00, according to Benzinga Pro data.
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