Ulta Beauty Shares Rise After Analyst Upgrade, Retail Bearishness Little Changed

Shares of Ulta Beauty Inc (ULTA) rose 2% on Tuesday, and extended gains during the after-market trading hours, after Goldman Sachs upgraded its rating on the company's shares.

The brokerage increased its rating to 'Buy' from 'Neutral' and price target to $423 from $384, according to The Fly.

Analysts at the firm said growth in the beauty industry had "largely normalized" after a post-pandemic boom driven by a return to offices and social gatherings, and it sees Ulta Beauty "likely outperforming" the industry.

"We expect comp momentum in Q1 and FY25, supported by quarter-to-date trends, rising monthly active users since November 2024, and a notable increase in search activity for '21 Days of Beauty’," analysts said in a note.

In the company's earnings report last month, management discussed plans to improve the layout and presentation of its stores and promote more wellness products and online sales.  

Ulta forecasted full-year revenue between $11.5 billion and $11.6 billion and earnings per share of $22.50 to $22.90, missing analysts' targets on both parameters, according to Marketwatch.

CFO Paula Oyibo called the guidance cautionary at the time.

Meanwhile, two brokerages lowered their price targets last month. Jefferies adjusted it to $334 from $354, while Barclays slashed it to $327 from $445.

On Stocktwits, retail investors' sentiment was 'bearish', with low message volume around the stock.

One user commented that they would buy the dip in shares, praising the company's loyalty program and omnichannel strategy.

Currently, 15 of 30 analysts rate the stock 'Hold' and 14 rate it 'Buy' or higher, according to Koyfin data. Their average price target is $412.13.

Ulta shares closed Tuesday at $373.91, down 14% year to date.

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