Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Ulta Beauty (NASDAQ:ULTA) raised its fiscal 2025 earnings guidance following a strong first-quarter performance that exceeded analysts’ expectations, sending shares up over 8% in pre-market trading.
The company reported Q1 EPS of $6.70, surpassing both the consensus estimate of $5.48 and its own guidance of $5.85.
This beat, driven by better-than-expected sales and gross margins, allowed Ulta to raise its full-year EPS guidance to $22.65-$23.20, up from $22.50-$22.90.
The company also raised its comparable sales (SSS) guidance to 0-1.5%, reflecting strong performance.
However, it warned of potential sales deceleration in the second half of 2025 due to macroeconomic uncertainty.
Despite the strong start, analysts at BofA Securities maintained a "neutral" rating, citing near-term margin pressure due to reinvestments in advertising, brand-building, and labor.
They project a 50-basis-point decline in gross margin for the full year, mainly in the second half, as sales deleverage could lead to higher expenses.
Still, BofA sees potential in Ulta’s initiatives, including exclusive product expansions and enhanced services.
In product performance, Ulta’s fragrance category showed double-digit growth, driven by exclusive launches.
Skincare and wellness also grew, while haircare and makeup showed little growth. E-commerce grew 10%, bolstered by digital initiatives like personalized marketing and a new app.
Ulta plans to introduce a "subscribe and save" feature to boost replenishment sales, which currently account for 15-20% of member spend.
Morgan Stanley (NYSE:MS) raised their 2025 and 2026 EPS estimates by 2% and 4%, respectively, based on strong Q1 results and confidence in Ulta’s ability to sustain momentum.
They expect comps to range from +1.3% in 2025 to +2% in their base case, with higher growth possible in 2026.
D.A. Davidson analysts said the improving competitive landscape, noting that Ulta has lapped Sephora’s store-within-a-store rollout and has seen accelerating comps for three consecutive quarters.
They raised their price target to $485 from $415 , citing Ulta’s ability to drive growth through new product introductions, including 19 new brands launched in Q1.
Evercore ISI analysts also highlighted Ulta’s market share gains, especially in both mass and prestige segments.
They noted a slowdown in Sephora’s growth and a shift in consumer preferences, particularly among teens.