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Stellar Quarter
Analyst Kelly Halsor noted Ulta Beauty reported adjusted earnings per share of $1.91, ahead of the estimated $1.77, with a better-than-expected 14.3 percent increase in comp and 60 basis points of operating margin expansion aiding the solid results.Want Private Access to Benzinga Analyst?
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"LTA remains one of the fastest growing companies in retail and we see no signs of a slowdown in the business near-term as the company continues to take meaningful share in the growing prestige beauty category," the analyst said.
More Upside Likely
Buckingham Research Group downgraded the shares of Ulta Beauty to Neutral from Buy, while it raised the price target on the shares to $330 from $325, suggesting 9 percent upside from current levels.
With the revised price target, representing a 35-times multiple, the firm said most of the upside to earnings per share is already priced in, given that a multiple expansion beyond 35 times seems difficult to contemplate.
Any Growth Slowdown Could Drag Shares
While noting that Ulta Beauty's premium valuation is supported by substantial expected future earnings per share beat, the firm said the stock could pullback if there is any indication of slowdown in growth.
"As such, we will move to the sidelines for now and recommend investors remain opportunistic around valuation to add to positions," the firm said.
"At current levels, we believe the risk/reward is more fairly balanced with 20 percent downside/24 percent upside."
At the time of writing, shares of Ulta Beauty were up 4.01 percent at $304.80.
Related Links: 5 Stocks To Watch For May 26, 2017 Should Ulta Beauty Split Its Stock?Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.