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On Friday, Barclays (LON:BARC) analyst Adrienne Yih adjusted the price target for ULTA Beauty (NASDAQ: ULTA) stock, reducing it to $327.00 from the previous $445.00, while maintaining an Equal Weight rating. The revision follows ULTA’s announcement of fourth-quarter 2024 results, which surpassed expectations in terms of sales, gross margin (GM), selling, general & administrative expenses (SG&A), operating margin (OM), and earnings per share (EPS). Despite these positive results, the company’s full-year 2025 guidance did not meet consensus expectations.
ULTA’s fourth-quarter performance showed a 1.5% increase in comparable store sales, which was better than the consensus estimate of 0.8%. This growth came amidst a highly competitive landscape, with the company maintaining a P/E ratio of 12.5 and generating over $995 million in free cash flow over the last twelve months. However, the company did experience a market share loss within the beauty category for the first time in fiscal year 2024, attributed to intensified competition in both physical stores and e-commerce, as well as internal issues including store presentation, inventory levels, and execution challenges. InvestingPro subscribers have access to 12 additional key insights about ULTA’s competitive position and financial health.
In response to these challenges, ULTA plans to implement four key initiatives in 2025: an accelerated focus on wellness, the launch of a new marketplace to boost e-commerce growth, expansion of its international presence, and enhancements to its UB media offering. Despite these initiatives, the company’s outlook for fiscal year 2025 suggests a cautious approach, with comparable store sales expected to be flat to a 1% increase.
Barclays’ continued Equal Weight rating reflects the belief that ULTA faces both near-term and medium-term obstacles, such as increased competition, decelerating comparable store sales, and the potential need to reduce fixed costs as sales growth slows. The firm notes that a more positive stance on ULTA shares would require evidence of strategic investment growth aligning with sales, a pipeline of innovation driving demand, and progress towards long-range business growth targets.
ULTA shares experienced a 6.5% increase in trading following the earnings report on March 13, 2025, outperforming the S&P 500, which remained flat.
In other recent news, ULTA Beauty has reported its fourth-quarter results for 2025, showcasing a strong performance with earnings per share (EPS) of $8.46, surpassing the forecasted $7.11. Revenue for the quarter was $3.5 billion, slightly above the anticipated $3.46 billion. Despite these positive results, Jefferies adjusted its price target for ULTA Beauty to $354 from $412, citing macroeconomic and competitive pressures that led to a full-year guidance shortfall. Meanwhile, Raymond (NSE:RYMD) James lowered its price target to $450 from $495, maintaining an Outperform rating, and Evercore ISI reiterated its $465 target, expressing optimism about a turnaround. DA Davidson also adjusted its target to $415 from $510, keeping a Buy rating on the stock.
ULTA Beauty’s management has reaffirmed long-term targets, including low-to-mid single-digit growth in the beauty category, while planning to accelerate brand investment and store expansion. The company acknowledges challenges from increased brand distribution affecting its business and anticipates potential market share losses through 2025. Evercore ISI analysts highlighted that ULTA’s guidance balances revenue and market share projections with flexible margin guidance, allowing for growth investments. Furthermore, ULTA Beauty announced an exclusive launch of Beyoncé’s haircare line, leveraging its strengths in in-store salons. These developments reflect the company’s strategic initiatives aimed at enhancing its competitive position and capitalizing on opportunities for margin improvement.
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