Ulta Beauty: Strong Q1 Performance Amid Cautious Outlook, Hold Rating Due to Fair Valuation

Kelly Crago, an analyst from Citi, maintained the Hold rating on Ulta Beauty (ULTA – Research Report). The associated price target was raised to $450.00.

Kelly Crago’s rating is based on a combination of factors that reflect both positive performance and cautious outlooks. Ulta Beauty’s first-quarter earnings per share significantly exceeded expectations, driven by stronger sales and lower selling, general, and administrative expenses. This indicates that competitive pressures, such as those from Sephora’s distribution expansion, are easing, and Ulta is executing effectively. However, despite this strong performance, the company’s guidance for the fiscal year was only modestly increased, reflecting management’s cautious stance due to macroeconomic uncertainties.
While Ulta Beauty has shown resilience in differentiating itself through better brand assortment and marketing strategies, the stock’s current price-to-earnings multiple suggests a balanced risk and reward scenario. The shares are trading at a multiple of 19 times the estimated earnings for fiscal 2025, which implies that the stock is fairly valued at current levels. As a result, Kelly Crago has opted for a Hold rating, indicating that while there is potential for growth, the current valuation does not present a compelling buy opportunity.

In another report released today, Piper Sandler also reiterated a Hold rating on the stock with a $437.00 price target.

Based on the recent corporate insider activity of 27 insiders, corporate insider sentiment is neutral on the stock.