DA Davidson cuts ULTA stock target to $415, keeps buy rating

On Friday, DA Davidson analyst Michael Baker adjusted the price target on ULTA Beauty (NASDAQ: ULTA) shares, reducing it to $415 from the previous $510, while maintaining a Buy rating on the stock. Currently trading at $314.47, near its 52-week low of $309.01, the stock has seen significant pressure, down about 28% year-to-date. The revision follows ULTA Beauty’s recent financial performance, which surpassed quarterly sales and profit expectations. Despite issuing guidance that fell short of the consensus, the outlook was perceived more positively than market predictions.

ULTA Beauty’s first-quarter commentary also fared better than anticipated, considering the vendor readthroughs. Baker believes these factors may contribute to a relief rally for ULTA stock, which had experienced a considerable downturn prior to the earnings report. The company maintains strong financial health with a current ratio of 1.63x and operates with moderate debt levels. The analyst noted that ULTA has navigated past challenges with Sephora, as stores previously affected by overlap are now showing improvement.

However, Baker also acknowledged that ULTA faces ongoing competitive pressures from major players such as Amazon (NASDAQ:AMZN), Tik Tok, and Walmart (NYSE:WMT). While the fundamentals for ULTA are described as mixed, the analyst suggests that the current valuation of the stock already factors in negative outcomes to a large extent. The adjusted price target reflects a shift in retail multiples, now based on a 16x multiple of the firm’s 2026 earnings forecast.

Baker’s comments highlight ULTA’s resilience in a competitive landscape and suggest a cautious optimism for the company’s stock performance moving forward. Despite the lowered price target, the Buy rating indicates a belief in ULTA’s potential for growth and recovery in value.

In other recent news, Ulta Beauty (NASDAQ:ULTA) Inc. reported its fourth-quarter results for 2025, showcasing a strong performance with earnings per share (EPS) of $8.46, which surpassed analyst expectations of $7.11. The company’s revenue for the quarter was $3.5 billion, slightly above the anticipated $3.46 billion. These results come despite a 1.9% decrease in net sales compared to the previous year, highlighting Ulta Beauty’s ability to navigate market challenges. The company ended the fiscal year with net sales of $11.3 billion, marking a slight increase from the previous year.

Ulta Beauty also announced plans for further expansion after launching 40 new brands in 2024, despite facing increased competition that impacted its market share. The company’s strategic focus on enhancing its wellness category and improving in-store experiences was discussed during the earnings call. CEO Keisha Seelman emphasized Ulta’s commitment to strategic investments and business optimization to achieve long-term goals. Additionally, the company projected net sales between $11.5 billion and $11.6 billion for 2025, with a focus on maintaining or slightly increasing comparable sales.

Ulta Beauty’s operational strategy includes a cautious approach to ongoing economic uncertainties, with plans to manage inflationary pressures and invest in new business areas. The company aims to optimize its cost structure, targeting cost savings of $200 million to $250 million over the next three years. As part of its growth strategy, Ulta Beauty is also focusing on expanding its wellness offerings and launching a new marketplace to enhance its e-commerce presence.

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