Ulta Beauty (ULTA) is set up to continue to grow profitably as the company posted a Q2 comp beat and share gains while protecting gross margins during its toughest quarter, Bank of America Securities said in a Friday research report.
Comp durability was supported by higher ticket, primarily due to category mix, and market share gains in the company's prestige category despite stiff competition, according to the note.
Promotions increased in Q2 in an uncertain environment, but Ulta's underlying business improved modestly on lower shrink and supply chain productivity, analysts wrote.
The brokerage said it reiterated its buy rating on the stock and lowered its price target to $650 per share from $685.
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