Ulta's Strategic Moves And Market Share Poise Spark Optimism, Analysts Elevate Forecasts Post-Q4 Triumph

Stifel analyst Mark S. Astrachan reiterated the Hold rating on Ulta Beauty, Inc. ULTA, raising the forecast to $565 from $505.

Yesterday, Ulta Beauty reported fourth-quarter revenue that increased 10.2% year-over-year to $3.55 billion and beat the consensus estimate of $3.53 billion.

Category growth, promotional activity, and competition are the main watchpoints for the just-reported fourth quarter by Ulta, the analyst writes.

For 2024, Ulta anticipates U.S. beauty category growth to moderate to mid-single-digits, with comp growth suggesting the company will maintain its share.

Also Read: These Analysts Boost Their Forecasts On Ulta Beauty Following Q4 Results

According to Astrachan, this reflects some conservatism but also competitive dynamics, including expanding distribution of certain prestige brands, which could result in modest increases in company/category promotional activity.

Also notable is that the business mix continues to shift, with skincare and fragrance/bath continuing to drive growth, with declines in makeup (mass up, prestige down) and haircare (reflecting ongoing weakness in tools), the analyst adds.

Following the fourth quarter results, the analyst raised FY24 revenue forecast to $11.86 billion from $11.64 billion.  

For FY25, Astrachan increased revenue projection to $12.68 billion from $12.26 billion.

Per Oppenheimer analyst Rupesh Parikh, Ulta remains a “top pick,” highlighting its international expansion plans, where the company plans to expand in Mexico through a joint venture with Axo in 2025.

Parikh also remains bullish on Ulta’s superior merchandisers with a strong track record of innovation, coupled with potential to deliver above-average growth rates in retail.

The analyst reiterated the Outperform rating on the stock with a forecast of $600.

Following the fourth-quarter results, Parikh increased the FY24 EPS projection to $26.45 from $25.35.

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Price Action: ULTA shares are trading lower by 4.29% to $541.16 on the last check Friday.

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