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Investing.com - DA Davidson raised its price target on Ulta Beauty (NASDAQ:ULTA) to $625.00 from $585.00 on Friday, while maintaining a Buy rating on the beauty retailer’s stock. The new target represents significant upside potential for the $23.9 billion market cap company, which currently trades at $530.63 with a P/E ratio of 20.6.
The price target increase follows Ulta’s recovery from a period of comparable sales weakness that began a year ago, when the company was "missing and guiding down with comps showing declines for the first time." According to InvestingPro data, the stock has shown remarkable resilience with a strong 44.8% return over the past six months, and 11 analysts have recently revised their earnings estimates upward.
DA Davidson attributed much of the previous comparable sales weakness to the rollout of Sephora store-within-a-store locations, which began ramping up in the second quarter of 2022 and was more than 90% complete by the third quarter of 2023.
The analyst noted this continued to pressure Ulta’s performance for the following year until the company fully lapped these changes in the third quarter of 2024, which is "about when comps bottomed."
With these challenges now behind Ulta Beauty, DA Davidson stated "it makes sense that Ulta’s comps would start to improve," supporting the firm’s higher price target and continued Buy rating.
In other recent news, Ulta Beauty reported strong second-quarter results, with comparable sales growth of 6.7% year-over-year, surpassing analyst expectations of approximately 3%. The company’s overall sales increased by 9.3%, driven by growth in transactions and average ticket size, as well as contributions from the Space NK acquisition and new store openings. Following these results, several analyst firms have raised their price targets for Ulta Beauty. TD Cowen increased its target to $600, citing the significant sales growth. Raymond James raised its target to $605, maintaining an Outperform rating. Telsey Advisory Group adjusted its target to $610, attributing the increase to Ulta’s strong first-half performance and improved full-year outlook. Goldman Sachs set a new price target of $584 after the earnings beat, while Canaccord Genuity raised its target to $650, highlighting the company’s robust quarterly performance.
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