Barclays now sees two Fed cuts this year, says jumbo Fed cuts ’very unlikely’
On Friday, Stifel analysts adjusted their outlook on ULTA Beauty (NASDAQ: ULTA) shares, reducing the price target from $475.00 to $400.00 while maintaining a Hold rating. The revision followed ULTA Beauty’s fourth-quarter earnings for fiscal year 2024, which showcased earnings before interest and taxes (EBIT) of $516 million, surpassing the consensus estimate of $441 million. The reported comparable store sales (comp) growth of 1.5% also exceeded the anticipated 0.8%, alongside a gross margin of 38.2%, higher than the consensus projection of 37.1%. With a current market capitalization of $15.56 billion and trading at $338.25, InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $310 to $526.
ULTA Beauty provided its first full-year 2025 guidance, which included comp growth expectations of 0%-1%, slightly below the consensus forecast of 1.2%. The company’s projected earnings per share (EPS) for fiscal year 2025 are between $22.50 and $22.90, which is lower than the consensus estimate of $23.52. This anticipated decline in EPS, approximately 11% year-over-year at the midpoint, is attributed to significant investments aimed at enhancing the company’s competitiveness. These investments are focused on brand building, improving digital capabilities, and advancing personalization initiatives. The stock has experienced significant pressure, falling over 27% year-to-date, with InvestingPro data showing 12 additional key insights available for subscribers.
Despite the overall decline in EPS, Stifel’s commentary highlighted that the guidance was better than what was initially feared by the market. The firm also noted that the projected comp growth suggests ULTA Beauty may continue to lose market share, given the expected low-single-digit growth in the U.S. beauty category. Nonetheless, the company’s expectation of consistent quarterly comp performance, with the first quarter trending toward the lower end of the guidance range, was seen as a positive sign. Stifel expressed a favorable view of ULTA’s position, noting that flat comp growth in the first quarter would be better than many of ULTA’s peers, even amid increased macroeconomic uncertainty and volatility in the beauty category. InvestingPro analysis reveals strong fundamentals with a "GOOD" overall financial health score, supported by liquid assets exceeding short-term obligations and a moderate debt level.
In other recent news, ULTA Beauty announced its fourth-quarter results, reporting a slight sales decline of 1.9% year-over-year, which outperformed expectations of a 2.5% decrease. Comparable store sales increased by 1.5%, exceeding the anticipated 0.8%, and the company’s earnings per share (EPS) reached $8.46, surpassing forecasts. Analysts from Canaccord, Barclays (LON:BARC), Raymond (NSE:RYMD) James, Jefferies, and Evercore ISI have adjusted their price targets for ULTA Beauty, reflecting a mixed outlook on the company’s future performance. Canaccord and Evercore ISI maintained their Buy and Outperform ratings, respectively, highlighting optimism in ULTA’s strategic initiatives and market share recovery. Barclays and Jefferies expressed caution, citing competitive pressures and a guidance that fell short of consensus expectations, leading them to maintain Equal Weight and Hold ratings. Raymond James also lowered its price target but kept an Outperform rating, noting ULTA’s solid performance in the fragrance category and strategic plans to enhance competitiveness. ULTA Beauty has announced several initiatives for 2025, including a focus on wellness, e-commerce growth, and international expansion, despite a cautious sales outlook. The company plans to increase investments in fiscal year 2025, aiming for sustainable growth amid an uncertain economic climate.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.