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On Friday, Evercore ISI analyst Michael Binetti increased the price target for ULTA Beauty (NASDAQ: ULTA) shares to $490 from the previous target of $465, while maintaining an Outperform rating on the stock. Binetti highlighted ULTA’s first-quarter performance, indicating that the company’s market share gains are becoming evident. This optimism is supported by InvestingPro data showing 8 analysts revising their earnings estimates upward for the upcoming period, with the stock currently trading at $421.79.
ULTA Beauty reported a same-store sales (SSS) growth of 2.9%, surpassing both the Street’s and Evercore ISI’s expectations, which were 0.4% and flat, respectively. This growth represents an acceleration from the 1.5% SSS growth seen in the previous quarter. The company’s strong performance is reflected in its impressive 42.78% gross profit margin and overall revenue growth. Binetti noted this achievement came even as competitors like Blue Mercury and Sephora within Kohl’s (NYSE:KSS) experienced slowdowns in their quarterly growth.
According to Binetti, ULTA Beauty had previously entered a share loss cycle as competitors expanded their physical presence and digital players such as Amazon (NASDAQ:AMZN) entered the beauty category. However, he believes that the impact of competitor store openings on ULTA’s market share is diminishing. Binetti’s optimism is also based on the potential for ULTA to outperform the current consensus estimates for fiscal years 2025 and 2026, coupled with approximately 3% square footage growth, improving SSS trends, and low tariff risk. InvestingPro analysis reveals the company maintains a "GREAT" financial health score of 3.05, suggesting strong operational fundamentals.
The raised price target to $490 is supported by a valuation of 18 times the projected 2026 earnings per share (EPS), up from the former multiple of 17 times. Currently trading at a P/E ratio of 16.54, ULTA Beauty appears to be trading below its InvestingPro Fair Value, suggesting potential upside opportunity. In his comments, Binetti reiterated the Outperform rating for ULTA Beauty, reflecting confidence in the company’s continued market share gains and financial performance. For deeper insights into ULTA’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, ULTA Beauty has reported robust first-quarter results for fiscal year 2025, exceeding expectations with a 2.9% increase in comparable store sales and a strong earnings per share (EPS) of $6.70, surpassing the consensus estimate of $5.81. The company’s performance has led to several analyst firms adjusting their price targets. DA Davidson increased their target to $485, praising ULTA’s ability to beat earnings and revenue forecasts while raising future guidance. JPMorgan also raised its price target to $525, highlighting ULTA’s operating margin improvement and market share gains in both the mass and prestige segments. Citi adjusted its target to $450, noting the company’s ability to execute business strategies effectively, despite cautious guidance for fiscal 2025. Raymond (NSE:RYMD) James set a new target at $500, citing ULTA’s growth across various segments and an optimistic outlook for the fiscal year. Morgan Stanley (NYSE:MS), seeing a favorable risk/reward scenario, increased their price target to $550, emphasizing ULTA’s successful Unleashed strategy and its potential for continued market share gains. These developments underscore ULTA Beauty’s strong position in the competitive beauty retail market.
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