JPMorgan has increased its price target for ULTA Beauty (NASDAQ: ULTA) to $472 from $450 while maintaining an Overweight rating on the stock.
The firm's analyst highlighted that ULTA's Analyst Day presentation aligned with long-term earnings expectations but also presented a cautious outlook for 2025.
ULTA indicated that its 2025 guidance would be conservative, with projected comparable store sales (comps) and operating margins falling below previously anticipated levels.
ULTA's management set a cautious tone for 2025, suggesting that comparable store sales might grow at a rate below the 3-4% algorithmic expectation and that operating margins could be under 12%, with 11% as the minimum threshold.
The outlook implies that earnings could be flat or potentially decline in 2025, considering the estimated factors such as unit growth, comps, margin declines, and earnings per share growth driven by share repurchases.
The analyst noted that while estimates are still being revised, the consensus for ULTA's 2025 earnings per share (EPS) seems to be converging around $23, factoring in a 1% increase in same-store sales and an 11.6% operating margin.
This figure is slightly below the prior consensus of $24.60 at the midpoint of the guidance. The analyst also pointed out that given ULTA's challenges over the past year and the new Chief Financial Officer's untested ability to navigate through a slowdown and market share loss in the prestige segment, it was unlikely that ULTA would set overly optimistic targets.
In other recent news, ULTA Beauty has been in the spotlight following various analyst ratings and the announcement of its revised financial goals. The beauty retailer plans to increase its store count by 200 over the next three years, targeting 4-6% annual sales growth and an EBIT margin of approximately 12.0% starting in fiscal year 2026. The company also announced a new $3 billion share repurchase authorization.
Analysts from different firms have provided their insights on ULTA Beauty's prospects. Citi maintained a Neutral stance, while Stifel raised the price target to $395, maintaining a Hold rating. Piper Sandler kept a Neutral rating, increasing the price target to $357, and Loop Capital reiterated its Buy rating, maintaining a $450 price target.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on ULTA Beauty's financial position and market performance. As of the last twelve months ending Q2 2025, ULTA reported a revenue of $11.32 billion, with a modest growth of 5.51%. The company's P/E ratio stands at 14.72, suggesting a relatively moderate valuation compared to some high-growth retail stocks.
InvestingPro Tips highlight that ULTA operates with a moderate level of debt and maintains liquid assets that exceed short-term obligations. This financial stability aligns with the company's cautious outlook for 2025, as discussed in the analyst day presentation. The company's ability to manage its balance sheet effectively could provide a buffer during potential market slowdowns.
Another relevant InvestingPro Tip notes that management has been aggressively buying back shares. This strategy could support earnings per share growth, even in a challenging market environment, which may partially offset the conservative outlook for 2025 mentioned in the JPMorgan analysis.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for ULTA Beauty, providing a deeper understanding of the company's financial health and market position.
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