Shares of Ulta Beauty (ULTA) jumped on Friday after the beauty retailer delivered strong Q3 results that saw a return to positive sales growth. J.P. Morgan’s five-star analyst, Christopher Horvers, dismissed concerns about Ulta facing long-term challenges by saying past issues were likely temporary and caused by cyclical factors. As a result, he kept a Buy rating on the stock and raised the price target to $480 from the previous target of $472 per share.
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Analysts also highlighted Ulta’s strong customer traffic and ability to hit its financial goals, even if it has to offer more discounts in early 2025. In fact, Citi’s Kelly Crago noted that Ulta is outperforming other retailers. At the same time, Oppenheimer analysts added that declining traffic at Kohl’s (KSS) could hurt Sephora (LVMUY), giving Ulta a competitive advantage.
Furthermore, Canaccord Genuity’s Susan Anderson, who is also a five-star analyst, pointed out that Ulta’s wide product selection and ability to attract customers position it well against Sephora. Interestingly, Canaccord’s November beauty survey shows that more shoppers prefer Ulta for high-end beauty products, and Sephora’s slower sales growth at Kohl’s could give Ulta an edge in the long run.
Investor Sentiment for ULTA Stock Is Currently Very Positive
And it is not just analysts who are positive on the stock. In fact, the sentiment among TipRanks investors is currently very positive. Interestingly, 5.2% of those holding the stock increased their positions in the last 30 days. Furthermore, only 0.5% of the 757,682 portfolios tracked by TipRanks actually hold shares, which suggests that Ulta is still an overlooked stock by many. This means that there is room for investors to pile into the stock if the business continues to perform well going forward.
Is ULTA a Good Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ULTA stock based on 13 Buys, nine Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 13% drop in its share price over the past 12 months, the average ULTA price target of $404.83 per share implies 5.5% downside risk.
