Market Overview

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

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

Analysts at Goldman Sachs turned less bullish on Ulta Beauty Inc (NASDAQ: ULTA) amid a more mixed beauty environment. The firm's Matthew Fassler maintains a Buy rating on Ulta's stock with a price target lowered from $290 and $267 while simultaneously removing the name from the "Goldman Sachs Conviction List."

Cosmetics accounted for approximately 51 percent of Ulta's total revenue last year but industry sources are now calling for "lesser innovation" in the space, Fassler commented in a research report. While the beauty industry is also seeing greater innovation in hair-care and skincare, the growth in these two categories won't be large enough to offset a slowdown in cosmetics. However, this doesn't imply that investors should be concerned as the company remains a share gainer in the overall beauty space.

In fact, investor concerns are either "misguided or premature" as there is no reason to believe Ulta's core value proposition is under threat, Fassler added (see his track record here). For the time being at least it would be wrong to assume that Amazon.com, Inc. (NASDAQ: AMZN) offers a compelling alternative or that the addition of rival brands to Amazon's platform is imminent.

Bottom line, stabilization in Ulta's revenue and ability to achieve same-store sales guidance remains a base case scenario. But weaker than prior trends in the overall beauty space implies a reduction in Ulta's price target is necessary although the stock still boasts an "appealing" risk to reward profile.

Related Links:

Amazon Fear, Analyst Downgrade Make For An Ugly Ulta Beauty Chart

Ulta Beauty Becoming A Better Balanced Business
_______
Image Credit: By Michael Rivera (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Latest Ratings for ULTA

DateFirmActionFromTo
Jun 2020BarclaysUpgradesEqual-WeightOverweight
Jun 2020Morgan StanleyMaintainsEqual-Weight
Jun 2020Piper SandlerUpgradesNeutralOverweight

View More Analyst Ratings for ULTA
View the Latest Analyst Ratings

 

Related Articles (ULTA)

View Comments and Join the Discussion!

Posted-In: Beauty Beauty StocksAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
TYGB of A SecuritiesUpgrades
ZIONB of A SecuritiesMaintains39.0
RFB of A SecuritiesMaintains13.0
PNCB of A SecuritiesMaintains123.0
HBANB of A SecuritiesMaintains11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com