Telsey raises ULTA Beauty stock target to $520, keeps Outperform rating

Friday, ULTA Beauty (NASDAQ: ULTA) shares received a positive update from Telsey Advisory Group, with the firm raising its price target on the stock to $520 from the previous $460, while maintaining an Outperform rating. The upgrade aligns with InvestingPro data showing 8 analysts recently revising their earnings estimates upward, with the stock currently appearing slightly undervalued based on Fair Value analysis. Telsey’s decision follows ULTA’s robust performance at the beginning of the fiscal year, where it exceeded revenue, margins, and EPS expectations.

ULTA Beauty has demonstrated a strong presence in the domestic beauty market, capturing a larger share even amid heightened competition and challenges related to sales cannibalization. With trailing twelve-month revenue of $11.4 billion and an impressive gross margin of 42.71%, the company continues to show financial strength. The company’s new CEO, Kecia Steelman, who took the helm on January 6, has been effectively implementing the Ulta Beauty (NASDAQ:ULTA) Unleashed plan. Notably, in the first quarter, ULTA achieved a 10% growth in its e-commerce platform and saw increases in member growth, brand engagement, and earned media value. Get deeper insights into ULTA’s financial health with a comprehensive Pro Research Report, available exclusively on InvestingPro, where you’ll find detailed analysis of the company’s performance metrics and growth potential.

In response to the company’s first-quarter outperformance, ULTA has raised the high end of its FY25 revenue outlook and adjusted its full-year EPS range upward. This comes after initial FY25 guidance had been set lower than previous expectations, with the year labeled as transitional and focused on investments for market share gains and long-term profitability.

Despite the uncertainties for the latter half of FY25, Telsey finds ULTA’s momentum in the first quarter promising. The firm attributes ULTA’s competitive advantage to its store portfolio, infrastructure, omni-channel capabilities, a robust loyalty program, and strategic brand partnerships. InvestingPro analysis reveals the company’s strong financial position with a healthy current ratio of 1.67 and management’s commitment through aggressive share buybacks. These factors, combined with ULTA’s broad appeal to both mass and prestige beauty customers in a resilient market category, support the Outperform rating.

Telsey’s new price target of $520 is based on a 19.6x multiple on their two-year forward EPS estimate. This valuation is compared to ULTA’s three-year next twelve months (NTM) average multiple of 17.4x and the five-year average multiple of 20.9x.

In other recent news, ULTA Beauty reported impressive first-quarter results for fiscal year 2025, surpassing analyst expectations with a 4.5% increase in sales and a 2.9% rise in comparable store sales. The company’s adjusted earnings per share reached $6.70, exceeding the Street’s estimate of $5.81. Following these results, ULTA raised its guidance for earnings per share, revenue, and comparable store sales for the upper end of the forecast, despite potential uncertainties in the latter half of the year. Analysts responded positively, with Canaccord Genuity raising its price target to $542, Goldman Sachs to $473, Evercore ISI to $490, DA Davidson to $485, and JPMorgan to $525, all maintaining positive ratings on the stock. Analysts cited ULTA’s market share gains and strategic execution as key factors in their optimistic outlooks. Additionally, ULTA’s management highlighted their success in the fragrance category and effective promotional strategies as contributors to the strong performance. The company’s ability to navigate competitive pressures from Amazon (NASDAQ:AMZN) and other retailers was also noted as a sign of resilience. Overall, ULTA’s first-quarter achievements and raised forecasts have garnered confidence from several major financial firms.

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