Tuesday, ULTA Beauty shares are poised for market attention after Canaccord Genuity increased the price target to $538 from $500, maintaining a Buy rating. The adjustment follows ULTA Beauty’s announcement on Monday that CEO Dave Kimbell will retire, having contributed to the company in various executive roles for over 11 years.
Kecia Steelman, currently President and Chief Operating Officer, is set to succeed Kimbell as the next CEO and will also join the company's board. Kimbell will remain in an advisory role until the end of June to ensure a smooth transition.
In addition to the leadership change, ULTA Beauty provided an update that underscored a stronger-than-anticipated holiday season, with quarter-to-date trends prompting the management to revise both comparable store sales (comp) and margin expectations for the fourth quarter upward. Canaccord Genuity's analysts noted that Ulta's strategic maneuvers and promotional activities during the holiday season were effective in recapturing market share.
The firm's positive outlook on ULTA Beauty is reinforced by proprietary surveys indicating a consumer preference for Ulta over competitor Sephora. The surveys and holiday checks revealed robust demand for beauty products, with Ulta strategically deploying promotions to regain wallet share. The analysts believe these developments serve as significant evidence of the effectiveness of Ulta's strategies.
Canaccord Genuity's decision to raise the price target is based on the company's strong holiday performance, which may set the stage for a better-than-anticipated outcome in 2025. The raised price target reflects confidence in ULTA Beauty's ongoing business momentum and strategic initiatives that have been resonating well with consumers.
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