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Ulta Beauty to Meet Second Quarter Street Views, Maintain Full-Year Forecasts, Oppenheimer Says

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Ulta Beauty to Meet Second Quarter Street Views, Maintain Full-Year Forecasts, Oppenheimer Says

Ulta Beauty (ULTA) will likely meet second-quarter market expectations, though ongoing uncertainty and increasing US competition will prompt management to keep full-year forecasts unchanged even with a potential earnings beat, Oppenheimer said Tuesday.

The brokerage said Wall Street's estimates for earnings per share of $6.18 and comparable store sales growth of 2.3% in the second quarter are "achievable."

"We expect the chain to benefit from a still attractive beauty backdrop, ongoing newness, and traction with key company initiatives," Oppenheimer analysts said.

Management will likely maintain its conservative outlook and confirm full-year performance targets despite an earnings beat due to ongoing broader economic headwinds, shifting consumer demand, and heightened market competition, according to the note.

"We would continue to take advantage of any potential dips in a likely volatile trade as (Ulta Beauty) is still up against difficult comp comparisons until (second quarter of 2027)," Oppenheimer added. "Based on our review of historical valuations and free cash generation, we see a bottom in the mid-$400s."

The investment firm said the current risk-reward profile for Ulta Beauty shares was attractive and reiterated an outperform rating on stock with a 12-18 month price target of $650.

Ulta Beauty was up by nearly 6% in Tuesday trade, reducing the year-to-date loss to about 13.8%.

Ulta Beauty is scheduled to release its latest quarterly results on Aug. 27.

Elsewhere in the beauty sector, Estee Lauder (EL) will report fiscal fourth quarter and full-year results before the market opens on Wednesday. The cosmetics company will likely provide full-year guidance in line with its preliminary expectations, as most factors underpinning the outlook remain intact, RBC Capital Markets said in a Monday client note.

Price: $520.92, Change: $+27.59, Percent Change: +5.59%

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