Investing.com – Ulta Beauty (NASDAQ:ULTA) slumped on Friday after the company’s guidance cut and earning miss triggered a wave of downgrades from analysts.
Ulta cut its guidance on full-year earnings per share to a range of $11.86 to $12.06, from a prior range of $12.83 to $13.03, sending its shares tumbling 30%. The stock turned negative for the year so far, down about 2.5%.
The company reported earnings per share of $2.72 on revenue of $1.67 billion. Analysts polled by Investing.com anticipated earnings per share of $2.80 on revenue of $1.68 billion.
It wasn’t so long ago that Ulta) could do no wrong, bucking the gloomy backdrop for cosmetics, but its profit cut and earnings miss during the second quarter was “thesis changing,” said Morgan Stanley (NYSE:MS), as it joined in on the slew of rate cuts on the stock.
Morgan downgraded Ulta to equal-weight from over-weight and slashed price target to $275 from $395. Piper Jaffray (NYSE:PJC) downgraded the shares to neutral from a buy-equivalent and cut its price target to $250 per share from $360.
But among the wave of downgrades, there are some, however, who are not ready to call time on the stock just yet, Gina Sanchez, CEO of Chantico Global said in a CNBC interview on Thursday.
She cautioned, however, that Ulta’s valuation had become “too lofty.”
Sanchez was not alone in her backing the stock as Loop Capital insisted the long-term outlook for the company was “fairly bullish” given the continued weakness in the mall-based department store channel and the retailer's “top-notch” loyalty program.
Ulta has a consensus price target of $370, according to estimates compiled by Investing.com.