UPDATE: Citigroup Reiterates Buy Rating, Lowers PT on Ulta Salon, Cosmetics & Fragrance as Pullback Creates Opportunity

In a report published Friday, Citigroup analyst Oliver Chen reiterated a Buy rating on

, but lowered the price target from $145.00 to $123.00. In the report, Citigroup noted, “Comps encouragingly +6.8% vs. guidance of +5-7%, & EPS only a slight miss, however, stock lower as ULTA guided 2013E EPS -5-7% below street on intensified Holiday competition & valuation expectations were high given ULTA was trading at 28x P/E. While we admit our expectations were too exuberant, we are retaining our Buy rating & Focus List status because we still believe the business model remains differentiated, has less fashion risk, & superior growth aspects with an accelerating comp forecast (7-9% in 4Q vs. +6.8% in 3Q) & sq ft growth of +22% vs. sector average of +9%. Realistically, investors may need to be patient as next fundamental catalyst is 1H March; however, we believe premium growth deserves a premium multiple, & this print does not derail our view of 20%+ EPS growth vs. sector of ~15%. We are lowering our PT to $123 (from $145) on 26x (from 27x) on lower ests given new guidance & incremental promotions to drive traffic.” Ulta Salon, Cosmetics & Fragrance closed on Thursday at $96.36.