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On Friday, Raymond (NSE:RYMD) James analyst Olivia Tong raised the price target on ULTA Beauty (NASDAQ: ULTA) to $500 from the previous $450, while keeping an Outperform rating on the shares. Tong’s assessment followed ULTA’s announcement of strong sales growth and a significant beat on quarterly expectations, despite uncertain economic conditions. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward, with price targets ranging from $315 to $510. The company, currently valued at $19.04 billion, appears slightly undervalued based on InvestingPro’s Fair Value analysis.
ULTA Beauty’s first quarter results revealed a robust start to the fiscal year 2025, with the company experiencing growth across various segments. The company saw gains in both mass and prestige categories, and e-commerce sales rose by 10% year-over-year, benefiting from recent technology advancements. With annual revenue reaching $11.3 billion and maintaining a healthy gross margin of 42.78%, ULTA’s financial health score on InvestingPro stands at "GREAT," supported by strong profitability metrics and moderate debt levels.
In light of the positive performance, ULTA Beauty has updated its fiscal year outlook. Comparable store sales are now expected to range from flat to a 1.5% increase, compared to the previous forecast of flat to 1%. Additionally, earnings per share (EPS) projections have been adjusted to $22.65 to $23.20, up from the prior estimate of $22.50 to $22.90. Trading at a P/E ratio of 16.54x, ULTA maintains strong financial metrics, as detailed in the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
Tong noted that management’s updated outlook is cautious, allowing for a range of outcomes should economic conditions worsen. However, the analyst expects less of a slowdown in the second half of the year than what ULTA’s guidance suggests. The improved outlook is attributed to factors such as better promotional efficiency, diminishing losses from theft as prevention measures take effect, more disciplined brand support, and reduced competitive pressures from Sephora/Kohl’s as more of their stores are included in comparisons. The company’s strong financial position is reflected in its current ratio of 1.7, indicating solid liquidity to meet short-term obligations.
ULTA’s forward-looking strategy and the potential for continued positive performance led Raymond James to increase their estimates and price target for the company. The revised price target of $500 reflects confidence in ULTA’s ability to maintain its growth trajectory and capitalize on market opportunities.
In other recent news, Ulta Beauty (NASDAQ:ULTA) reported a robust performance for the first quarter of 2025, with earnings per share (EPS) reaching $6.70, surpassing the forecasted $5.75. The company’s revenue also exceeded expectations, coming in at $2.85 billion compared to the anticipated $2.79 billion. Following these results, Ulta Beauty’s management has adjusted its fiscal year 2025 EPS guidance upwards to a range of $22.65 to $23.20. Additionally, the company projects full-year net sales between $11.5 billion and $11.7 billion. In light of these developments, Morgan Stanley (NYSE:MS) has raised its price target for Ulta Beauty stock to $550, maintaining an Overweight rating, while BofA Securities increased its target to $455 with a Neutral rating. The adjustments reflect confidence in Ulta’s strategic initiatives, including new brand launches and improved marketing efforts. Despite a dynamic consumer environment, analysts remain optimistic about Ulta Beauty’s potential for continued growth and market share gains.
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