Read How Raymond James Shifts Ratings On Ulta Beauty & Sally Beauty Amid Inflation - Ulta Beauty (NASDAQ:ULTA), Sally Beauty Holdings (NYSE:SBH)

Raymond James analysts Olivia Tong and Devin Weinstein have upgraded Ulta Beauty Inc ULTA to Strong Buy from Outperform and raised the price target to $485 from $475, implying a 24% upside.
The analysts believe the company has good prospects compared to its competitors amidst the volatile macro backdrop.
They cited the high household income of its consumers (40% earn over $100,000), a mix of prestige and mass brands, a solid pace of innovation in beauty, and solid sales from customers in its loyalty program as reasons to its advantage.
The analysts note consumer interest in beauty categories has picked up after about two years of stay-at-home practice, supporting sales momentum.
Meanwhile, Olivia Tong and Devin Weinstein have downgraded Sally Beauty Holdings Inc SBH to Underperform from Market Perform as it has the highest exposure to the low-income consumer in their coverage group.
The analysts see a downward trend for sales as consumers cut short on spending to compensate for the inflationary streak in necessities like gas and groceries.
They said customers are leaving long gaps between services to curtail spending levels, and the trend is likely to worsen.
Supply chain bottlenecks, including out-of-stocks in hair color and appliances, have led to the rescheduling of stylist appointments or choosing non-preferred brands.
Price Action: SBH shares are trading lower by 4.06% at $11.69 and ULTA higher by 1.47% at $391.56 on the last check Wednesday.