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.
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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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