Ulta Beauty To Recover In Second Half Of 2024: 8 Analysts Dissect Q1 Results

Shares of Ulta Beauty Inc ULTA were climbing in early trading on Friday, after the company reported better-than-expected first-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

Goldman Sachs On Ulta Beauty

Analyst Kate McShane maintained a Neutral rating, while reducing the price target from $476 to $475.

Although Ulta Beauty reported an earnings beat, its comps of 1.6% were slightly below consensus due to "share loss in prestige primarily driven by pressure in makeup and hair care," McShane said in a note. "ULTA is up against difficult top line compares following outsized growth in the category," she added.

The company lowered its full-year guidance for same-store sales of +2%-3%, from its earlier outlook of +4%-5%, the analyst stated. "That said, we continue to note that ULTA is one of the strongest merchandisers in retail with healthy beauty demand at its back," she further wrote.

JPMorgan On Ulta Beauty

Analyst Christopher Horvers reiterated an Overweight rating, while lifting the price target from $530 to $544.

"Comps better than feared and in-line with JPM Fireside expectations on slower industry growth and prestige share," Horvers wrote in a note.

Although Ulta Beauty continues to face competitive pressures, its 2024 guide "looks reasonable at the high end and the same can be said for 2025, in our view," the analyst stated. While comps in the second quarter are likely to be similar to the first quarter, the company's efforts to improve share dynamics can help it generate 3% comps in the back half of the year, he added.

Telsey Advisory Group On Ulta Beauty

Analyst Dana Telsey reaffirmed an Outperform rating and price target of $500.

Ulta Beauty reported earnings of $6.47 per share, beating consensus of $6.25 per share, with the upside being driven by "favorable operating expense deleverage, as sales were roughly in line with expectations and the gross margin fell slightly short," Telsey said. The company's total sales grew 3.5% to $2.726 billion, with comps slightly missing expectations, she added.

"The topline growth reflected strength in new stores and growth in other revenue along with the low-single digit comp that was driven by a 1.3% increase in transactions and a 0.3% increase in ticket," the analyst wrote. The company lowered its full-year outlook "to reflect more cautious sales growth and increased SG&A deleverage," she further stated.

Check out other analyst stock ratings.

Stifel On Ulta Beauty

Analyst Mark Astrachan maintained a Hold rating and price target of $475.

Ulta Beauty's results were broadly consistent with consensus, Astrachan said. He added that the company's full-year guidance was better than feared, "given intra-quarter commentary regarding weakening U.S. beauty category growth and its impact on the business."

"Revised guidance still implies improving comp growth through F2024, though with F2H now anticipated at 2%-4% (consensus ~5%)," the analyst wrote. The company's improving comps are likely to drive accelerating earnings growth, "with gross margin expansion and less SG&A expense deleverage," he further stated.

BMO Capital Markets On Ulta Beauty

Analyst Simeon Siegel reiterated a Market Perform rating, while reducing the price target from $540 to $500.

If the reduction in the company's guidance "proves the bottom," there could be meaningful upside to shares, "with the primary question focusing on what multiple to pay given EPS doesn't move materially," Siegel said.

On the other hand, if this proves to be the first reduction, with more to come, it "raises other questions," he added.

Oppenheimer On Ulta Beauty

Analyst Rupesh Parikh reaffirmed an Outperform rating and price target of $475.

Ulta Beauty's results were broadly in-line with expectations, with an earnings beat that was driven by cost control, Parikh said. The guidance was better than feared, he added.

"We continue to view a bottom in the $370s and see an attractive risk/reward over the next 12-18 months," the analyst further wrote.

Piper Sandler On Ulta Beauty

Analyst Korinne Wolfmeyer maintained an Overweight rating, while reducing the price target from $505 to $498.

"A moderating beauty market and competition are causing a weaker outlook for FY’24," Wolfmeyer wrote. He added, however, that several drivers continue to exist that may "help partially offset and support a ~LSD top line growth rate."

"Margins are also still structurally strong and trending several points ahead of pre-Covid," the analyst stated.

BofA Securities On Ulta Beauty

Analyst Lorraine Hutchinson reiterated a Neutral rating and price target of $425.

Management lowered full-year guidance "given the weaker start to the year and expectations for continued competitive pressures," Hutchinson said.

While prestige continues to face market share pressures "due to increased points of distribution," the additional promotions during the first quarter could drive traffic and "we expect mgmt will pull on this lever through the year," she added.

ULTA Price Action: Shares of Ulta Beautyhad were down 0.15% to $385.37 at the time of publication on Friday.

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