Amazon Fear, Analyst Downgrade Make For An Ugly Ulta Beauty Chart

It’s hard to imagine that Ulta Beauty Inc ULTA stock was trading above $314 per share less than five months ago. Ulta shares dipped as low as $189.50 on Thursday morning after analysts at Cleveland Research downgraded the stock from Buy to Neutral and said Ulta stock still isn’t cheap considering the challenging environment it is facing in the retail space.

Cleveland said hurricane disruptions and negative sales and margin trends will likely weigh on Ulta earnings in the near-term.

The downgrade came just a day after CNBC's Jim Cramer said he wouldn’t sell his Ulta shares at the current price, but he also wouldn’t recommend buying more.

Ulta was once considered among the handful of U.S. retail stocks that were immune to Amazon.com, Inc. AMZN’s dominance. Unfortunately, investors’ confidence in Ulta’s ability to dodge the Amazon bullet started dissipating back in July after reports started surfacing that Amazon is expanding its packaged beauty product offerings.

After initially dipping as low as $204.01 following its Q2 earnings report in August, Ulta stock showed signs of life, bouncing as high as $231.28 In the weeks that followed. However, the dead cat bounce was short-lived, and Thursday’s downgrade now has Ulta trading below $200 for the first time since early 2016.

Unless Ulta rallies to close above $204 on Thursday, it seems as if the stock is headed lower in the near-term. Bulls are hoping the initial bounce off of $190 is a sign that previous resistance in that region dating back to late 2015 will now serve as support.

The next few days will be critical for Ulta, as a dip below $190 could be a sign the stock is headed to the $150 level to find support.

Joel Elconin contributed to this story.

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Image credit: Mike Mozart, Flickr