18% Higher From Here? This Analyst Sees More Upside For Beauty Stock That Has Outperformed The Market In 2022

Ulta Beatuy Inc ULTA gave shareholders a reason to cheer this quarter.

The cosmetics company issued earnings that exceeded expectations and provided a positive outlook, continuing a recent pattern among businesses involved in the beauty industry. In fiscal year 2022, it booked over $985 million in profits and over $8.6 billion in sales.

Despite record high inflation, demand for its skincare and cosmetics items remained high. Ulta's 14.4% rise in comparable-store sales was driven by a strong combination of expanding customer traffic and higher spending per-visit.

EPS growth is anticipated to exceed 24% in 2022, outpacing the average for the retail sector, which anticipates a decline of 6.9%.
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Company management emphasized its market share gains in a growing sector. “Strong consumer demand and broad-based momentum across our business continued as our teams executed our plans with excellence,” CEO Dave Kimbell said in a press release.

Despite the stock's bumpy performance this year, it has outperformed both the overall market indexes and other beauty stocks in the market. Gianni Di Poce, an analyst, sees even more potential, forecasting 18% returns for investors.

“I am bullish on ULTA as long as the stock remains above $372.00-$380.00. Upside target $500.00-$510.00,” Di Poce said in his weekly “Benzinga Pro Insider Report,” where he gives tips, and provides technical analysis on stocks.

Despite the fact that Americans have cut back on discretionary spending due to record high inflation, the analyst points out that consumers will still buy beauty products since they are essential items.

“Although beauty products fall into the category of discretionary spending, it’s one of the last items to be reduced or eliminated if consumers face a spending crunch,” the analyst said, “Hence, ULTA provides one of the safest bets within the consumer discretionary space.”

The stock is currently testing resistance at a huge saucer formation from a technical standpoint. “The duration of the saucer renders it into the category of, ‘the bigger the base, the higher the space,’” he wrote, implying a swing to the upside in the near future.

Other Analyst Ratings:
Barclays: Raised price target from $491.00 to $511.00
Cowen & Co: Raised price target from $480.00 to $503.00
Oppenheimer: Raised price target from $485.00 to $505.00