Ulta Beauty's Q3 Earnings Exceed Expectations, Showing Progress Towards Regaining Trust

Piper Sandler's Korinne Wolfmeyer raised their price target on Ulta Beauty (NASDAQ: ULTA) by 5.9% from $540 to $572 on 2023/12/01. The analyst maintained their Strong Buy rating on the stock.

In an assessment of Ulta Beauty's Q3 2023 earnings report, Wolfmeyer highlighted the company's ability to thrive in a tough consumer market. With another quarter of growth that exceeded expectations, Ulta Beauty reported earnings per share (EPS) of $5.07, beating the Zacks Consensus Estimate of $4.96 but falling short of Q3 2022's $5.34 by 5.1%. Revenue for the quarter reached $2.49 billion, surpassing the Zacks Consensus Estimate of $2.47 billion and Q3 2022's $2.34 billion by 6.4%.

Ulta Beauty's comparable sales, which include sales for stores open at least 14 months and e-commerce sales, experienced a 4.5% increase, surpassing the consensus estimate of 2.5%. However, the company's operating income declined by 9.6% to $327.2 million compared to Q3 2022's $361.9 million. The operating margin also decreased by 240 basis points to 13.1%.

Despite these challenges, Ulta Beauty remains focused on regaining trust and progressing towards future success. CEO Dave Kimbell expressed confidence in the company's performance, stating, "Q3 represented another strong performance by the Ulta Beauty team, as sales, gross profit, and diluted EPS all exceeded our internal expectations." Kimbell also highlighted the expansion of their loyalty program to a record 42.2 million members and expressed optimism about the future of the beauty category.

Wolfmeyer's positive assessment of Ulta Beauty's Q3 2023 earnings report aligns with the sentiments of other analysts. Christopher Horvers from JP Morgan raised their price target on ULTA by 5.9% to $535 and maintained a Strong Buy rating on the stock. Mark Altschwager from Baird also increased their price target by 1.8% to $560 and maintained a Buy rating. On the other hand, Ike Boruchow from Wells Fargo raised their price target by 6.7% to $400 and maintained a Strong Sell rating.

Overall, 78.6% of top-rated analysts currently rate Ulta Beauty as a Strong Buy or Buy, while 14.3% see it as a Hold, and 7.1% recommend or strongly recommend selling the stock.

Looking ahead, analysts forecast that Ulta Beauty's next yearly EPS will be $24.91, representing a 0.5% increase on a year-over-year basis. Since Ulta Beauty's latest quarterly report on November 30, 2023, the stock price has risen by 14.3%. However, on a year-over-year basis, the stock is only up by 3%, trailing behind the S&P 500, which has also increased by 14.3%.

It is worth noting that Piper Sandler analyst Korinne Wolfmeyer is ranked in the top 26% of all Wall Street analysts, with an average return of 2.8% and a 46.7% win rate. They specialize in the Consumer Defensive and Consumer Cyclical sectors.

Ulta Beauty, Inc. is a leading retailer of beauty products in the United States. The company operates a chain of stores offering cosmetics, fragrances, skincare and haircare products, salon services, and nail services. Ulta Beauty also sells private label products under the Ulta Beauty Collection brand. As of March 10, 2022, Ulta Beauty operated 1,308 retail stores across 50 states. The company also distributes its products through its website and mobile applications.

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