What's Going On With Ulta Shares Friday?

Ulta Beauty, Inc. (NASDAQ:ULTA) shares are trading higher Friday after the company beat third quarter estimates and raised its full-year GAAP earnings per share guidance.

What To Know: The company posted earnings per share of $5.14, beating the consensus estimate of $4.54. In addition, the company reported sales of $2.85 billion, beating the consensus estimate of $2.72 billion.

Ulta said third quarter results exceeded internal expectations, driven by stronger comparable sales, newness across its assortment, improved in-store and digital experiences and expanded marketing efforts. Comparable sales rose 6.3%, supported by increases in both average ticket and transactions. Net sales grew 12.9%, aided by contribution from Space NK and new store openings.

Gross profit rose from the prior-year period, helped by lower inventory shrink and higher merchandise margin. SG&A expenses increased, reflecting higher incentive compensation, payroll, store expenses and amortization tied to cloud-based software investments. Operating income totaled $309.4 million.

The company ended the quarter with $204.9 million in cash and cash equivalents. Merchandise inventories increased year-over-year, reflecting new brand launches, the addition of Space NK and 63 net new Ulta stores. Short-term debt rose as the company drew on its credit facility to support working capital needs and capital allocation priorities.

Ulta repurchased 426,914 shares during the quarter at a cost of $224.7 million. The company operated 1,500 U.S. stores at the end of the period, in addition to 84 U.K. and Ireland locations operated by Space NK.

Management said momentum continued across all categories and channels, with particular strength in ecommerce. The company raised its full-year GAAP earnings per share guidance, citing confidence heading into the holiday season.

FY25 Outlook: The company raised its GAAP earnings per share guidance from between $23.85 and $24.30 to between $25.20 and $25.50, versus the consensus estimate of $24.40. It also raised its revenue guidance from between $12.00 billion and $12.10 billion to about $12.30 billion, versus the consensus estimate of $12.13 billion.

Analyst Changes: Following the earnings report, multiple analysts issued price target adjustments.

• JP Morgan analyst Christopher Horvers maintained an Overweight rating on Ulta and raised the price target from $606 to $647.
• Piper Sandler analyst Anna Andreeva maintained an Overweight rating on Ulta and raised the price target from $590 to $615.
• Telsey Advisory Group analyst Dana Telsey maintained an Outperform rating on Ulta and raised the price target from $610 to $640.
• Baird analyst Mark Altschwager maintained an Outperform rating on Ulta and raised the price target from $600 to $670.

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ULTA Price Action: At the time of writing, Ulta shares are trading 14.09% higher at $608.87, according to data from Benzinga Pro.

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