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Ulta Beauty, Inc. (ULTA), headquartered in Bolingbrook, Illinois, is a specialty beauty retailer offering a wide range of branded and private label beauty products. With a market cap of $19.3 billion, the company offers cosmetics, fragrance, skin, and hair care products, as well as salon services.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and ULTA definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the specialty retail industry. ULTA boasts a diverse portfolio of approximately 25,000 products from 600 beauty brands, appealing to a wide range of consumer preferences. The company's partnership and investment in digital innovation has enhanced customer engagement and set industry standards. Its omnichannel retailing strategy, combined with a strong Ulta Beauty Rewards program, drives customer loyalty and provides valuable consumer insights for tailored experiences and promotions.
Despite its notable strength, ULTA slipped 27.5% from its 52-week high of $574.76, achieved on Mar. 14. Over the past three months, ULTA stock rose 3.5% underperforming the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 18.6% gains during the same time frame.
In the longer term, shares of ULTA dipped 15% on a YTD basis and fell 14.7% over the past 52 weeks, underperforming XLY’s YTD gains of 27.9% and 27% returns over the last year.
However, ULTA has been trading above its 50-day moving average since late November. The stock is trading above its 200-day moving average since early December.
ULTA's underperformance stems from consumers cutting back on non-essential spending amid economic uncertainty, impacting the company's sales.
On Dec. 5, ULTA reported its Q3 results, and its shares closed up by 9% in the following trading session. Its EPS of $5.14 surpassed Wall Street expectations of $4.47. The company’s revenue was $2.53 billion, beating Wall Street forecasts of $2.49 billion. ULTA expects full-year EPS to be between $23.20 and $23.75, and expects revenue in the range of $11.1 million to $11.2 million.
ULTA’s rival, Sally Beauty Holdings, Inc. (SBH) has taken the lead over the stock, declining 8.7% on a YTD basis and 4.9% over the past 52 weeks.
Wall Street analysts are moderately bullish on ULTA’s prospects. The stock has a consensus “Moderate Buy” rating from the 28 analysts covering it, and the mean price target of $445.80 suggests a potential upside of 7% from current price levels.
