Ulta (ULTA) stock slipped in early trading Friday after the beauty store retailer cut its full-year outlook despite reporting better-than-expected first-quarter results.
For the three months ended May 4, Ulta’s net sales increased 3.5% year-over-year to $2.7 billion, driven by a 1.6% increase in comparable-store sales and 10 net new store openings. Its earnings per share (EPS) decreased 6% to $6.47 from the year-ago period.
"The Ulta Beauty team delivered net sales growth of 3.5% and comparable sales growth of 1.6% in a dynamic operating environment," Ulta CEO Dave Kimbell said in a statement. "We have a clear plan to accelerate our momentum and continue delivering a best-in-class assortment and engaging experiences for our guests."
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Ulta's bottom line beat analysts’ expectations, as Wall Street was anticipating earnings of $6.24 per share, according to data from Refinitiv. Sales of $2.7 billion matched estimates.
Despite the strong start to the year, decelerating comparable-store sales contributed to Ulta cutting its full-year outlook. Here’s what the company now expects compared to its previous guidance:
| Metric | New Outlook | Previous Outlook |
|---|---|---|
| Net Sales | $11.5 billion to $11.6 billion | $11.7 billion to $11.8 billion |
| Comparable-Store Sales | 2% to 3% | 4% to 5% |
| EPS | $25.20 to $26 | $26.20 to $27 |
"I remain confident in our differentiated model, the resilience of the beauty category, and our ability to execute against our plans, but we have adjusted our annual guidance as we anticipate the dynamics we faced in the first quarter to continue for the balance of the year," Kimbell said.
Is Ulta stock a buy, sell or hold?
Analysts remain bullish on the beauty retailer. According to S&P Global Market Intelligence, the average analyst target price for ULTA stock is $498.10. That gives shares implied upside of more than 29% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm UBS is one of the most bullish firms on Ulta stock with a Buy rating and $550 price target.
"We think a key takeaway is that ULTA set more realistic expectations for 2024," UBS said in a note to clients. "This was a learning event. There's nothing fundamentally wrong with ULTA's model.”
The $550 price target represents implied upside of over 42% to current levels.
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