Ulta Beauty Stock Gets a Much-Needed Boost After Earnings
Beaten-down Ulta Beauty stock is notably higher Friday after the cosmetics retailer's strong earnings report and encouraging outlook.
Ulta Beauty (ULTA) stock is surging Friday after the beauty retailer beat top- and bottom-line expectations for its fiscal third quarter and raised its full-year outlook.
In the 13 weeks ended November 2, Ulta's revenue increased 1.7% year over year to $2.53 billion, driven by new store openings and a 0.6% rise in same-store sales. Its earnings per share (EPS) were up 1.4% from the year-ago period to $5.14.
"The Ulta Beauty team delivered better-than-expected sales and profitability reflecting improved sales trends and strong financial discipline," said Ulta CEO Dave Kimbell in a statement. "As we look to the remainder of fiscal 2024, we are focused on executing with excellence across our key initiatives to deliver in a dynamic environment."
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The results topped analysts' expectations. Wall Street was anticipating revenue of $2.5 billion and earnings of $4.54 per share, according to CNBC.
As a result of its strong performance in the third quarter, Ulta made positive revisions to its full-year outlook. Here's what the company now expects to accomplish in its fiscal year versus its previous forecast:
| Metric | Updated outlook | Prior outlook |
|---|---|---|
| Revenue | $11.1 billion to $11. billion | $11 billion to $11.2 billion |
| Comparable-store sales | (1%) to 0% | (2%) to 0% |
| Earnings per share | $23.20 to $23.75 | $22.60 to $23.50 |
"We remain confident that our model and strategies will drive long-term profitable growth and share leadership by enhancing our position as the destination for beauty enthusiasts for a lifetime," Kimbell said.
Is Ulta Beauty stock a buy, sell or hold?
It's been a tough road for Ulta Beauty in 2024, with the consumer discretionary stock down more than 11% for the year to date. Still, Wall Street remains bullish on the former Berkshire Hathaway equity portfolio holding.
According to S&P Global Market Intelligence, the consensus recommendation among the 31 covering analysts it tracks is a Buy. However, Wall Street did not anticipate the significant surge after earnings. Indeed, shares are up nearly 9% at last check. And analysts' average price target of $432.77 sits right around Ulta's current share price.
Financial services firm Oppenheimer is one of the more bullish outfits on the retail stock with an Outperform rating (equivalent to a Buy) and $505 price target.
"We continue to look favorably on ULTA's long-term prospects," says Oppenheimer analyst Rupesh Parikh. Among the many reasons Parikh is bullish on Ulta are the company's "differentiated offering and unique value proposition," its "potential to deliver above-average growth rates in retail" and the stock's "ongoing market share potential."
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