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Investing.com - BofA Securities raised its price target on Ulta Beauty (NASDAQ:ULTA) to $500 from $455 on Wednesday, while maintaining a Neutral rating on the beauty retailer’s stock. The new target aligns with the broader analyst community’s outlook, with InvestingPro data showing 14 analysts recently revising their earnings estimates upward for the upcoming period.
The price target increase comes as BofA continues to model fiscal 2025 gross margin decline of 50 basis points and a 10% increase in selling, general and administrative expenses as the company invests in advertising, brand building, and store labor. Currently, Ulta maintains a healthy gross margin of 42.7%, and InvestingPro analysis indicates the company operates with strong financial health, earning a "GREAT" overall score.
BofA expects margin pressure to be weighted toward the second half of the fiscal year due to sales deleverage and the timing of investments that have been shifted toward later in the year.
The firm views Ulta’s second-half comparable sales guidance as potentially conservative, suggesting room for outperformance.
BofA identified leverage on stronger comparable sales as the best opportunity for Ulta Beauty to deliver a margin beat in the coming quarters.
In other recent news, Ulta Beauty has reported first-quarter sales exceeding analyst expectations, with a 4.5% year-over-year increase to approximately $2.848 billion, surpassing the anticipated $2.794 billion. The company’s comparable store sales rose by 2.9%, driven by a 2.3% increase in average ticket size and a 0.6% rise in transactions. Following these results, Ulta Beauty has updated its forecasts, raising the high end of its full-year 2025 sales and comparable store sales guidance. In a separate development, Ulta Beauty announced the departure of Chief Financial Officer Paula Oyibo, with Chris Lialios stepping in as interim CFO. Evercore ISI maintained its Outperform rating on Ulta, noting the company’s broad search for a permanent CFO as a positive sign. Analyst firms have also adjusted their price targets for Ulta Beauty, with Loop Capital raising its target to $510.00 and TD Cowen to $465.00, reflecting optimism in the company’s pricing strategies and comparable store sales improvements. BMO Capital Markets has increased its price target to $454.00, maintaining a Market Perform rating, citing confidence in Ulta’s ability to sustain its performance.
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