Why Ulta Beauty Stock Is Still a Buy After Earnings
Ulta Beauty stock is falling Friday after disappointing earnings, but Wall Street isn't worried. Here's what you need to know.
Ulta Beauty (ULTA) stock is trading lower Friday after the beauty retailer fell short of top- and bottom-line expectations for its second quarter and cut its full-year outlook.
In the 13 weeks ended August 3, Ulta's revenue increased 0.9% year-over-year to $2.55 billion, with top-line growth pressured by a 1.2% slump in comparable-store sales. Its earnings per share (EPS) declined 12% from the year-ago period 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 -tore sales," said Ulta CEO Dave Kimbell in a statement. "We are clear about the factors that adversely impacted our store performance, and we have actions underway to address the trends."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results fell short of analysts' expectations. Wall Street was anticipating revenue of $2.6 billion and earnings of $5.46 per share, according to Yahoo Finance.
"In light of our first-half trends and a more cautious outlook, we have updated our full-year expectations," Kimbell said. Here's what the company now expects to accomplish in its fiscal year versus its previous forecast:
| 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 |
Analysts were forecasting revenue of $11.5 billion and earnings of $25.23 per share for Ulta in 2024.
Is Ulta stock a buy, sell or hold?
It's been a rough year on the price charts for Ulta Beauty. While shares got a short-lived boost earlier this month on news Ulta was added to Warren Buffett's Berkshire Hathaway equity portfolio in Q2, they remain more than 27% lower for the year to date. Still, Wall Street remains bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the consensus analyst target price for ULTA stock is $413.55, representing implied upside of roughly 16% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm Oppenheimer has an Outperform rating (equivalent to a Buy) on ULTA stock with a $435 price target.
"We continue to look favorably on ULTA's long-term prospects," says Oppenheimer analyst Rupesh Parikh, citing the company's differentiated offerings, potential to deliver above-average growth rates in retail, and strong management as some of the reasons he is bullish.
"We continue to view ULTA shares as appropriate for longer-term players and would take advantage of any dips from here," Parikh adds.
Related Content
-
Nasdaq Leads as Tech Stages Late-Week Comeback: Stock Market TodayOracle stock boosted the tech sector on Friday after the company became co-owner of TikTok's U.S. operations.
-
Disney’s Risky Acceptance of AI VideosThe Kiplinger Letter Disney will let fans run wild with AI-generated videos of its top characters. The move highlights the uneasy partnership between AI companies and Hollywood.
-
Ask the Editor: Itemized DeductionsAsk the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on itemized deductions claimed on Schedule A of Form 1040
-
Nasdaq Leads as Tech Stages Late-Week Comeback: Stock Market Today
Oracle stock boosted the tech sector on Friday after the company became co-owner of TikTok's U.S. operations.
-
Are You Putting Yourself Last? The Cost Could Be Your Retirement SecurityIf you're part of the sandwich generation, it's critical that you don't let the needs of your aging parents come at the expense of your future.
-
I'm an Insurance Pro: It's Time to Prepare for Natural Disasters Like They Could Happen to YouYou can no longer have the mindset that "that won't happen here." Because it absolutely could. As we head into 2026, consider making a disaster plan.
-
The Future of Philanthropy Is Female: How Women Will Lead a New Era in Charitable GivingWomen will soon be in charge of trillions in charitable capital, through divorce, inheritance and their own investments. Here's how to use your share for good.
-
Cooler Inflation Supports a Relief Rally: Stock Market TodayInvestors, traders and speculators welcome much-better-than-hoped-for core CPI data on top of optimism-renewing AI earnings.
-
The November CPI Report Is Out. Here's What It Means for Rising PricesThe November CPI report came in lighter than expected, but the delayed data give an incomplete picture of inflation, say economists.
-
5 Smart Things to Do With Your Year-End Bonus, From a Financial ProfessionalAfter you indulge your urge to splurge on a treat, consider doing adult things with the extra cash, like paying down debt, but also setting up a "fun fund."
-
Are You a Gen X Investor? Here's How You Can Protect Your Portfolio From an AI BubbleAmid talk of an AI bubble, what's the best course of action for investors in their 50s and 60s, whose retirement savings are at risk from major market declines?
