Ulta Beauty (ULTA) stock experienced a dip after the beauty retailer missed its second-quarter earnings expectations and revised its full-year outlook downward. Despite these setbacks, analysts remain optimistic about the stock’s long-term potential.
Key Takeaways
- Revenue Growth: Ulta’s revenue for the 13 weeks ended August 3 increased by 0.9% year-over-year to $2.55 billion.
- Earnings Decline: Earnings per share (EPS) fell by 12% to $5.30.
- Comparable-Store Sales: Comparable-store sales saw a decline of 1.2%.
- Revised Outlook: The company updated its full-year revenue and EPS expectations.
- Analyst Sentiment: Despite the dip, analysts maintain a bullish outlook on the stock.
Second-Quarter Performance
Ulta Beauty’s revenue for the 13 weeks ended August 3 increased by 0.9% year-over-year to $2.55 billion. However, this growth was overshadowed by a 1.2% decline in comparable-store sales. The company’s earnings per share (EPS) also took a hit, declining by 12% from the previous year to $5.30.
"While we are encouraged by many positive indicators across our business, our second-quarter performance did not meet our expectations, driven primarily by a decline in comparable-store sales," said Ulta CEO Dave Kimbell.
Revised Full-Year Outlook
In light of the first-half trends and a more cautious outlook, Ulta Beauty has updated its full-year expectations. The new outlook is as follows:
| Metric | New Outlook | Previous Outlook |
|---|---|---|
| Revenue | $11 billion to $11.2 billion | $11.5 billion to $11.6 billion |
| Comparable-Store Sales | (2%) to 0% | 2% to 3% |
| Earnings per Share | $22.60 to $23.50 | $25.20 to $26 |
Analyst Recommendations
Despite the recent setbacks, Wall Street remains optimistic about Ulta Beauty’s long-term prospects. According to S&P Global Market Intelligence, the consensus analyst target price for ULTA stock is $413.55, representing an implied upside of roughly 16% from current levels. The consensus recommendation is a Buy.
Financial services firm Oppenheimer has an Outperform rating on ULTA stock with a $435 price target. Oppenheimer analyst Rupesh Parikh cites the company’s differentiated offerings, potential for above-average growth rates in retail, and strong management as reasons for his bullish outlook.
"We continue to view ULTA shares as appropriate for longer-term players and would take advantage of any dips from here," Parikh adds.
Conclusion
While Ulta Beauty’s recent earnings report and revised outlook have caused some concern, the long-term prospects for the stock remain strong. Analysts continue to recommend ULTA as a Buy, citing the company’s strong management and potential for growth. Investors may find opportunities in the stock’s current dip.
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