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On Friday, Canaccord Genuity updated its outlook on ULTA Beauty (NASDAQ: ULTA) shares, raising the price target to $542 from $510 while maintaining a Buy rating. The adjustment followed ULTA’s announcement of first-quarter results for fiscal year 2025, which exceeded analyst expectations. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward for the upcoming period, reflecting growing confidence in the company’s $19.04 billion market cap business.
ULTA Beauty reported a year-over-year sales increase of 4.5% for the first quarter of 2025, surpassing both Canaccord’s and the Street’s estimates of a 2.5% rise. Comparable store sales also saw a 2.9% increase year-over-year, which was significantly higher than the anticipated 0.3% by Canaccord and 0.2% by the Street. This robust performance translated into an earnings beat, with adjusted earnings per share (EPS) reaching $6.70 against the Street’s expectation of $5.81. The company’s strong execution is reflected in its impressive 50% return on equity and healthy current ratio of 1.67, indicating solid financial management.
The company’s EBIT margins for the quarter stood at 14.2%, outpacing the Street’s projection of 12.6%. The results were attributed to a combination of factors, including effective in-store execution leading to better stock availability and customer service, which in turn drove higher conversion rates. Additionally, strategic promotional management aided in maintaining gross margins at 42.71%, while new product offerings and innovations spurred traffic and customer engagement. InvestingPro analysis shows the company maintains a strong financial health score of "GREAT," with particularly robust profitability metrics.
ULTA’s management credited the strong results to their successful strategies, which have been instrumental in regaining market share in the beauty sector. Notably, the fragrance category continued to be a standout performer, marking another quarter of double-digit year-over-year growth.
Despite the positive outcomes, ULTA’s management pointed to the potential for increased uncertainty in the second half of the year. Nonetheless, the company has raised its guidance for earnings per share, revenue, and comparable store sales for the upper end of the forecast. Trading at a P/E ratio of 16.54, ULTA’s stock is currently priced near its Fair Value according to InvestingPro models, which offer comprehensive valuation insights among their 10+ exclusive ProTips for this stock.
In light of these developments, Canaccord Genuity expressed confidence in ULTA’s strategic direction and market share gains, leading to the decision to raise the price target. The firm’s analysts believe that ULTA’s approach is yielding results and recommend maintaining a Buy rating on the stock.
In other recent news, ULTA Beauty’s first-quarter earnings have exceeded expectations, prompting several analysts to raise their price targets for the company. Goldman Sachs increased its price target to $473, maintaining a Buy rating, after ULTA’s earnings and revenue surpassed forecasts. Similarly, Evercore ISI’s analyst Michael Binetti raised the price target to $490, highlighting ULTA’s 2.9% same-store sales growth, which outperformed expectations and marked an improvement from the previous quarter. DA Davidson also lifted its target to $485, noting ULTA’s successful navigation through competitive pressures and its strong performance among big-box retailers.
JPMorgan set the highest price target at $525, maintaining an Overweight rating, and emphasized ULTA’s impressive operating margin and market share gains. The analyst praised the company’s execution under new CEO Kecia Steelman and anticipates further profitability improvements. Meanwhile, Citi raised its price target to $450 while keeping a Neutral rating, acknowledging ULTA’s robust first-quarter results and improved prestige makeup sales. Despite the cautious increase in fiscal 2025 guidance, Citi sees potential upside in future quarters.
These developments reflect a positive outlook from analysts, who are encouraged by ULTA’s strategic initiatives and market position. The company’s ability to outperform expectations in a competitive environment has been a key factor in these recent analyst adjustments.
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