Ulta Beauty Loses Another Bull

Down nearly 30 percent over the past six months, Ulta Beauty Inc ULTA continues to lose support among Wall Street analysts. The latest to part ways with a bullish stance is Piper Jaffray's Erinn Murphy, who downgraded Ulta's stock from Overweight to Neutral with a price target slashed from $260 to $210.

Ulta's stock isn't as attractive today as it has been in the past given a lack of significant catalysts, Murphy explained in the note. Competition from Sephora remains fierce and Ulta also has to contend with new competition from up & coming online-only brands and potentially from Amazon.com, Inc. AMZN.

Meanwhile, Ulta's comp-store sales have "moderated somewhat" from the mid-teens which represents another reason to recommend buying the stock, the analyst added. The firm's proprietary survey with teenagers, "Taking Stock With Teens," found a decline in overall spending in color cosmetics (72 percent of total fiscal 2017 dollar growth) by 13 percent, while skincare declines were "less bad" and down 7 percent year-over-year.

The survey with teens also showed a decline in interest for Ulta's Ultamate Rewards program while Sephora's Beauty Insider program gained share.

Bottom line, Ulta's stock declines started prior to the survey but the results "leave us incrementally concerned on current category dynamics," Murphy concluded.

Related Links:

Ulta Beauty A Buy, But A Few Blemishes Move Stock Off Goldman's Conviction List

Ulta Beauty Bright Spots Don't Hide Its Blemishes