Ulta Beauty stock price target raised to $600 from $550 at TD Cowen

Investing.com - TD Cowen has raised its price target on Ulta Beauty (NASDAQ:ULTA) to $600 from $550 while maintaining a Hold rating on the stock. The beauty retailer, currently trading near its 52-week high of $538.59 and commanding a market cap of $23.89 billion, has shown remarkable momentum with a 44.84% return over the past six months. According to InvestingPro analysis, the stock appears to be trading close to its Fair Value.

The firm cited Ulta’s second-quarter comparable sales growth of 6.7%, which exceeded the Street’s expectation of 2.9%. This growth was driven by a 2.9% increase in ticket size and 3.7% growth in traffic, with cosmetics sales up by mid-single digits. The company’s strong performance is reflected in its "GREAT" financial health score on InvestingPro, with 11 analysts recently revising their earnings estimates upward.

Ulta’s gross margin improved by 90 basis points, which TD Cowen attributed to more effective promotions, lower shrink, and better in-stock positions. The company’s digital sales grew by low double digits, while store sales increased by mid-single digits.

TD Cowen noted that Ulta’s key strategies to sustain momentum include global expansion, wellness category growth, and a third-quarter marketplace launch. The firm’s $600 price target is based on a 22x multiple of fiscal year 2 price-to-earnings.

Despite the positive outlook, TD Cowen identified potential risks for the second half of the year, including margin deleverage due to store occupancy and supply chain optimization headwinds, as well as elevated SG&A spend growth of 13-14% compared to the prior 10% estimate.

In other recent news, Ulta Beauty reported a strong second quarter for fiscal year 2026, surpassing both earnings and revenue expectations. The company achieved an earnings per share of $5.78, significantly above the forecasted $4.99, and revenue reached $2.79 billion, exceeding predictions by 4.89%. This robust performance has led several firms to raise their stock price targets for Ulta Beauty. Raymond James increased its target to $605, maintaining an Outperform rating, while Telsey Advisory Group raised its target to $610, also maintaining an Outperform rating. Goldman Sachs adjusted its target to $584, with a continued Buy rating, citing the company’s better-than-expected quarterly results and updated fiscal year 2025 guidance. Canaccord Genuity set their target at $650, highlighting the company’s 6.7% year-over-year comparable sales growth and overall sales increase of 9.3%. These developments reflect strong investor confidence in Ulta Beauty’s performance and future prospects.

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