William Blair analyst Dylan Carden has maintained their neutral stance on ULTA stock, giving a Hold rating today.
Dylan Carden has given his Hold rating due to a combination of factors affecting Ulta Beauty’s current and future performance. The recent promotion of Kecia Steelman to CEO has led to a strategic shift aimed at revitalizing the company’s approach in the dynamic beauty industry. While there is a focus on reinforcing the core business and investing in new growth platforms, the management has indicated that 2025 will be a reset year, with modest comparable sales growth and margin pressures due to increased investment spending.
Despite the encouraging digital initiatives, such as the launch of a marketplace, there are concerns about their potential impact on the retail channel and structural operating margins. The shares are currently valued at a multiple that reflects the lack of immediate upside and slower growth prospects, with the risk of online sales cannibalizing retail sales being a significant concern. The valuation suggests that the market has already priced in these challenges, leading to the Hold rating as the company navigates through these transitional phases.
In another report released today, Barclays also maintained a Hold rating on the stock with a $327.00 price target.