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On Friday, Piper Sandler adjusted their price target for ULTA Beauty (NASDAQ: ULTA) shares, bringing it down to $364 from the previous target of $425. Despite this change, the firm maintained a Neutral rating on the stock. Currently trading at $343.45, ULTA has experienced significant pressure, declining over 11% in the past week. According to InvestingPro, management has been actively buying back shares, showing confidence in the company’s prospects.
The adjustment follows ULTA Beauty’s recent financial performance, with the company reporting a stronger fourth quarter and providing guidance for fiscal year 2025 that surpassed the low expectations set by bearish market sentiment. InvestingPro analysis reveals the company maintains a strong financial health score of 4.18 out of 5 for profitability, with a healthy gross margin of 38.8%.
Piper Sandler’s analyst stated that although the outlook is better than initially feared, there are still near-term challenges that have not been fully alleviated. These include declining year-over-year comparisons and margin pressures that continue to affect the company’s short-term prospects. Concurrently, analysts have been lowering their estimates, reflecting these ongoing concerns.
However, looking beyond the immediate fiscal year, the analyst noted that the long-term estimates remain intact. ULTA Beauty’s management is reportedly taking proactive steps to realign teams and strategic priorities. The goal is to regain market share and ensure steady margin progression, as outlined during the company’s Investor Day.
The analyst expressed a cautious optimism for the intermediate and long term based on these strategic moves. Nonetheless, the current lack of short-term upside opportunities led to the decision to maintain a Neutral stance and adjust the price target to $364 for the coming 12-month period.
In other recent news, ULTA Beauty reported its fourth-quarter earnings for fiscal year 2024, showcasing earnings before interest and taxes (EBIT) of $516 million, surpassing the consensus estimate of $441 million. The company also exceeded expectations with a comparable store sales growth of 1.5% and a gross margin of 38.2%. However, ULTA’s full-year 2025 guidance, including projected earnings per share (EPS) between $22.50 and $22.90, fell short of the consensus estimate of $23.52. Analysts responded with price target adjustments: Stifel lowered its target to $400 while maintaining a Hold rating, Canaccord reduced its target to $526 but kept a Buy rating, and Barclays (LON:BARC) cut its target to $327 with an Equal Weight rating. Raymond (NSE:RYMD) James decreased its target to $450, maintaining an Outperform rating, and Jefferies set a new target of $354, continuing with a Hold rating. Despite these adjustments, ULTA’s recent performance was seen as a validation of management’s strategies, with initiatives like Ulta Beauty (NASDAQ:ULTA) Unleashed aiming for sustainable growth. The company plans to focus on wellness, e-commerce, and international expansion to address competitive pressures and market share challenges.
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