Analysts At Baird Expect Strong Q2 From Ulta Salon

In the last four quarters, the company's EPS topped estimates between 2.7 percent and 12.4 percent. Currently, the Street expects an EPS of $1.40 on revenue of $1.06 billion for the second quarter.

Expectations

The lead analyst expects the company to report a minimum of in-line results for the second quarter. The confidence stems from the company's solid execution, supported by tailwinds in the category like specialty channel taking share and momentum on beauty category apart from traffic-driven initiatives. He is also confident of the company delivering e-commerce growth.

Related Link: Estee Lauder's Brands Showing Strong Social Media Traction

Baird said in its research note, "Comp guidance (+11–13 percent; vs. +12.5 percent/+12.9 percent estimate/consensus) incorporates sequential deceleration from Q1 (reported +15.2 percent comp). We wouldn't rule out upside to consensus given the multitude of powerful top-line drivers fueling recent performance. However, to the extent the optics of comps decelerating to 'only' ~13 percent results in a pullback, we would be buyers."

The brokerage does not see the stock as inexpensive, as the shares traded at a premium of 16 percent compared to its peers, but slightly more than its LTM average of 11 percent. However, the lead analyst believes that the premium valuation is justified in the case of Ulta.

At time of writing, Ulta was trading at $274.82, down 0.39 percent on the day.

Full ratings data available on Benzinga Pro.