7 Analysts Weigh In On Ulta's Q4 Miss

Analyst updates poured in after Ulta Beauty Inc ULTA reported a fourth-quarter earnings and sales miss, despite comps that were up 8 percent in the quarter. The cosmetics retailer issued weak first-quarter sales guidance and said it expects comps to rise 6-8 percent on the year. 

Loop Capital Maintains A Buy

Loop Capital analyst Anthony Chukumba maintained a Buy rating on Ulta and lowered the price target from $300 to $250.

The analyst said he was encouraged by the company’s Q4 operating margin and fiscal 2018 guidance, despite widespread promotions.

“We are also happy to see management has ‘reset expectations, which we think is entirely appropriate given Ulta Beauty’s long run of market-leading comparable sales growth and beat-and-raise quarters." 

William Blair Maintains Outperform

Ulta’s results were affected by slower industry growth in cosmetics and a slight increase in promotional activity, said William Blair analyst Daniel Hofkin.

“Nevertheless, our sense is that Ulta continues to execute as well as ever and gain market share,” the analyst said. 

William Blair maintains an Outperform rating on the stock.

Buckingham Research Says Add To Positions 

Buckingham Research analyst Kelly Crago is recommending investors add to positions at current levels, as Ulta "is one of the few attractive GARP stories in retail." 

Crago said she sees no evidence to suggest that Ulta will be unable to expand margins and return to 20-percent EPS growth beyond fiscal 2018.

Buckingham reiterated a Buy rating with a $270 price target.

Credit Suisse Maintains Outperform

Credit Suisse analyst Michael Binetti said he was surprised by the size of Ulta’s $100-million reinvestment plan for 2018, but believes the company has an opportunity to redeploy tax savings behind proven initiatives like prestige boutiques to reaccelerate comps.

Ulta remains one of the cheapest growth-adjusted stocks in the firm's sector coverage, the analyst said. 

Credit Suisse maintains an Outperform rating on Ulta with a price target lowered from $245 to $235.

BMO Raises Estimates

BMO analyst Shannon Coyne raised fiscal 2018 EPS estimates from $9.72 to $10.75 to reflect lower tax rates that are offset by higher investments.

“Management plans to use tax reform benefits on its associates and investments to drive growth and innovation, including improving store experience, AI and data capabilities and digital innovation,” she said.

Coyne reiterated a Market Perform rating on Ulta and lowered the price target from $225 to $220.

Stifel Lowers Price Target

Stifel analyst Mark Astrachan placed a Hold rating on Ulta and lowered the price target from $230 to $225.

“We believe watchpoints outweigh positives, with broadly increasing costs to sustain slowing comp growth likely to result in ULTA shares remaining range bound near-term," the analyst said. "While comp growth remains better than most retail peers, it is decelerating, with further slowdown anticipated by guidance, in part reflecting weakening U.S. beauty category growth." 

Morgan Stanley Reiterates An Overweight Rating

Ulta's Q4 was better than feared, said Morgan Stanley analyst Simeon Gutman.

“We upgraded ULTA in January as we saw an inexpensive stock for a quality business that could compound EPS over time,” he said.

Elements of Ulta's Q4 pointed to the business deteriorating, but the outlook suggests the company's story will "work" in 2018, Gutman said. 

Morgan Stanley reiterated an Overweight rating on Ulta and lowered the price target from $285 to $260.

Price Action

Ulta was down 0.36 percent at $221.08 early in Monday's trading session. 

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Posted In: Anthony ChukumbaBMOBuckingham ResearchCredit SuisseDaniel HofkinKelly CragoLoop CapitalMark AstrachanMichael BinettiMorgan StanleyShannon CoyneSimeon GutmanStifelWilliam BlairAnalyst ColorNewsPrice TargetReiterationAnalyst Ratings

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