Ulta Beauty Posts Q3 Beat, But Holiday Season Outlook Remains 'Cautiously Optimistic'

Shares of Ulta Beauty Inc (NASDAQ:ULTA) climbed in early trading on Friday, after the company reported upbeat third-quarter results.

Here are some key analyst takeaways:

• JPMorgan analyst Christopher Horvers reiterated an Overweight rating, while raising the price target from $606 to $647.
• Guggenheim Securities analyst Steven Forbes reaffirmed a Neutral rating on the stock.

Check out other analyst stock ratings.

JPMorgan: Ulta Beauty's third-quarter sales were driven by market share gains across categories, price points and channels. The company raised its sales, comps and earnings guidance for the full year to $12.3 billion, 4.4%-4.7%, and $25.20-25.50 per share, respectively. The prior outlook: $12.0-$12.1 billion, 2.5%-3.5%, and $23.85-$24.30 per share, respectively.

The raised guidance reflects the third-quarter beat and "a stronger-yet-cautious" outlook for the fourth quarter, with strong Black Friday and Cyber Monday performances as well as continued macro and consumer uncertainty, the analyst stated. Management maintained a "cautiously optimistic view of the holiday season overall given how much lies ahead and broader consumer pressures/uncertainty," he further wrote.

Guggenheim Securities: Ulta Beauty reported strong third-quarter results, with net sales and adjusted EBITDA "meaningfully" surpassing expectations, Forbes said. "In fact, net sales rose ~12.9%—led by solid market share gains within prestige skincare, prestige fragrances, and mass makeup," he wrote.

The analyst added that gross margin expansion was higher than expected, at around 70 basis points (bps) year-over-year, with positive contributions from:

• Shrink
• Merchandise margins
• Other revenue

The magnitude of the beat and management’s commentary on quarter-to-date trends indicate that the fourth-quarter outlook is not conservative, he further stated.

ULTA Price Action: Shares of Ulta Beauty had risen by 13.71% to $607.14 at the time of publication on Friday.

Read More:

• Here’s How Much $100 Invested In Ulta Beauty 15 Years Ago Would Be Worth Today

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