Ulta Beauty (ULTA) Stock Forecast & Price Target

Ulta Beauty, the largest specialized beauty retailer in the US, has demonstrated a solid financial performance with an estimated revenue increase of 3.4% year-over-year, bolstered by new store contributions and a 3.0% rise in average ticket values. The company reported a gross margin of 38.2% for the fourth quarter, which was above consensus expectations and reflects improvements in inventory management and merchandise margins, even as SG&A expenses edged up to 23.4% of sales. Additionally, with cash and cash equivalents of $703.2 million, Ulta's financial position remains strong, positioning the firm well for future growth opportunities, including planned international expansions.

Ulta Beauty has revised its total sales growth expectation downward to 2.6% year-over-year for a total of $11.59 billion, which is a reduction from the previous estimate of 3.1%. The company's fourth-quarter net sales also fell by 1.9% year-over-year, leading management to project earnings per share (EPS) in the range of $22.50 to $22.90, which is lower than both the previous consensus and last year's EPS of $25.34. Furthermore, a notable decline in makeup sales, with mid-single-digit decreases in comparable store sales, and a 6% year-over-year drop in spend per member highlight underlying weaknesses in customer engagement and sales performance.