Here's Why Raymond James Analyst Remains Bullish On Ulta Beauty

Raymond James analyst Olivia Tong reiterates a Strong Buy rating on the shares of Ulta Beauty Inc ULTA with a price target of $600.
ULTA reported a big beat to end FY22 with F4Q EPS of $6.68, well ahead of Raymond James' estimate of $5.65 and the consensus.
Comparable sales were up 16% versus Raymond James estimate of +8.5%, and sales increased 18% versus the analyst's estimate and consensus +11%.
The analyst said strength was broad-based, with each beauty sub-category and mass and prestige growing double-digits y/y.
Management introduced an FY23 outlook towards the upper end of its medium-term targets on comparable sales and ahead on margins, but it implies a growth deceleration after a very strong FY21/22, added the analyst.
The deceleration is attributed to challenging comps, an expectation for promotion to pick up that has yet to occur, heavier spending, and more volatile macros, even if it hasn't seen a slowdown and to the contrary, noted that momentum seen during the holiday continued into 1Q, remarked the analyst.
While mindful of comps, macros, and other risks, the analyst thinks the muted guide sets FY23 up for the continued potential for beats and raises.
Innovation should continue to sustain demand across categories, the company's more than 40 million plus loyalty members provide an edge should the environment get more promotional, and a greater focus on luxury brands will benefit average ticket size, the analyst said.
Also Read: Ulta Beauty Underpromises, Overdelivers: 4 Analysts Raise Price Targets After Q4 Print
Price Action: ULTA shares are trading higher by 0.84% at $524.31 on the last check Friday.
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