Ulta Beauty's Strong Q4 Earnings Spark Relief Rally But Analysts Stay Cautious

Cosmetics major Ulta Beauty Inc ULTA reported better-than-expected fourth-quarter FY24 earnings. The following are the comments from various analysts on the same.

Goldman Sachs analyst Kate McShane reiterated a Neutral rating and lowered the price forecast from $392.00 to $384.00.

ULTA’s fourth-quarter earnings beat expectations, with shares rising. Despite offering FY25 guidance below consensus, the company provided better-than-expected projections for a flat-to-positive comp and operating margins between 11.7% and 11.8%.

Management highlighted a positive fourth-quarter comp and emphasized growth in core categories. Meanwhile, ULTA acknowledged losing market share in FY24, particularly in the prestige segment, and outlined strategies to drive future growth, noted the analyst.

Stifel analyst Mark S. Astrachan reiterated a Hold rating on the shares and lowered the price forecast from $475.00 to $400.00.

Ulta’s fourth-quarter results exceeded expectations, with EBIT of $516 million, surpassing the consensus of $441 million, noted the analyst.

The company reported a 1.5% comp growth, ahead of the 0.8% consensus, and gross margin of 38.2%, outperforming the expected 37.1%.

For FY2025, Ulta guided for 0%-1% comp growth and EPS of $22.50-$22.90, slightly below consensus but better than feared. The expected 11% mid-point year-over-year EPS decline reflects significant investments in brand building, digital, and personalization initiatives.

Despite potential share loss, the company’s stable F1Q comp guidance is seen as favorable amid macroeconomic challenges, the analyst noted.

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Piper Sandler analyst Korinne Wolfmeyer reiterated a Neutral rating on the shares and lowered the price forecast from $425.00 to $364.00.

A stronger fourth-quarter performance and FY25 guidance surpassing bearish expectations are driving the stock higher, said the analyst.

Meanwhile, Street estimates continue to decline, with few signs of reversing the decelerating comparisons and margin challenges.

Despite this, looking beyond the next fiscal year, estimates remain stable, and management is acting swiftly to realign teams and strategies for market share recovery and consistent margin improvement as outlined during the Investor Day,

BMO Capital Markets analyst Simeon Siegel reiterated a Market Perform rating on the shares and lowered the price target from $467.00 to $404.00.

ULTA reported better-than-expected results, with strong comps, gross margin, and SGA contributing to a healthy EPS beat, said the analyst.

Looking ahead, the company provided FY25 guidance below Street expectations, labeling the year as transitional, as discussed in October’s Investor Meeting.

While ULTA operates in an appealing sector, the analyst likes to remain cautious until gaining more clarity on competition and distribution, which will influence sales and margins.

DA Davidson analyst Michael Baker reiterated a Buy rating on the shares and lowered the price target from $510.00 to $415.00.

According to the analyst, ULTA exceeded expectations for sales and profits, offering guidance that, while below consensus, was likely better than anticipated. First-quarter commentary also came in better than expected, despite vendor readthroughs.

As a result, the stock may experience a relief rally after a significant sell-off. While the Sephora issue is behind them, ULTA still faces competitive pressures from Amazon, TikTok, and Walmart. Overall, fundamentals are mixed, but the current valuation suggests a negative outlook, opined the analyst.

Canaccord Genuity analyst Susan Anderson reiterated a Buy rating on the shares and lowered the price forecast from $538.00 to $526.00.

Ulta reported fourth-quarter results with a slight sales decline of 1.9% Y/Y, beating expectations, and a positive comp growth of 1.5%, said the analyst.

New CEO Ms. Steelman introduced the “Ulta Beauty Unleashed” plan, focusing on sustainable growth and operational improvements.

Despite expected investments in FY25, management guided comps of flat to +1% due to macro volatility, while maintaining optimism about strong beauty demand and market share recovery, noted the analyst.

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares and lowered the price target from $500.00 to $460.00.

After a tough first half of FY24, Ulta improved in the second half, delivering better-than-expected fourth-quarter results.

Despite a slightly below-consensus FY25 guide, the outlook aligns with the company’s typically cautious approach, especially under new CEO Kecia Steelman.

FY25 is expected to be a transitional year, with investments aimed at gaining market share and driving long-term growth.

Given Ulta’s strong position in the beauty category, the company remains well-positioned, though the price target has been reduced due to market uncertainty, said the analyst.

Price Action: ULTA shares traded higher by 12.6% at $353.99 at last check Friday.

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