Simeon Gutman, an analyst from Morgan Stanley, maintained the Buy rating on Ulta Beauty (ULTA – Research Report). The associated price target remains the same with $500.00.
Simeon Gutman has given his Buy rating due to a combination of factors that suggest a positive outlook for Ulta Beauty despite recent challenges. The company’s stock has underperformed recently, with a 17% decline year-to-date compared to the S&P 500’s 2% drop. This underperformance is largely due to weaker trends in the beauty industry and a conservative guidance for 2025. However, Gutman sees potential for improvement as the industry normalizes and Ulta focuses on reinvestments.
Gutman’s analysis indicates that while the first quarter of 2025 may show negative comparable sales, this is attributed to broader macroeconomic factors rather than a loss of market share. He believes that as consumer sentiment and weather conditions improve, Ulta’s comparable sales could achieve a 1-2% growth in 2025. Additionally, Gutman notes that Ulta’s initiatives, such as enhancing social media engagement and personalization efforts, could help boost sales. The risk/reward profile appears favorable, with significant upside potential if these strategies are successful, justifying the Buy rating.