Why These 4 Ulta Analysts Lifted Price Targets After Q2 Earnings

Here's what four Ulta Beauty (NASDAQ: ULTA) analysts had to say after the beauty retailer's second-quarter print. 

The Ulta Beauty Analysts: Raymond James analyst Olivia Tong has an Outperform rating on Ulta and raised the price target from $395 to $460.

Wells Fargo analyst Ike Boruchow has an Outperform rating and raised the price target from $375 to $430.

BMO Capital analyst Simeon Siegel has a Market Perform rating and raised the price target from $320 to $345.

Telsey analyst Dana Telsey has an Outperform rating and raised the price target from $415 to $475.

The Ulta Beauty Takeaways: Ulta Beauty’s second-quarter results came in ahead of analyst expectations, leading to mostly positive commentary from the Street. 

An improvement in traffic trends was highlighted by Tong. The number of loyalty members also showed growth for the first time since the pandemic hit.

Boruchow said: “Ulta delivered even greater 2Q upside than was expected.” The company’s upside was “robust” compared to Street estimates, the analyst said. 

A faster-than-expected recovery in stores and high average ticket growth were two trends highlighted by Boruchow.

While many of Ulta Beauty’s segments saw growth, makeup continued to struggle.

Siegel said makeup trends are showing signs of improvement, with the comparable sales down slightly from 2019.

Telsey pointed to the strong performance of all Ulta sectors in the second quarter.

Related Link: Recap: Ulta Beauty Q2 Earnings

What’s Next: Ulta Beauty raised its full year guidance after the strong second quarter, an item mentioned by all four analysts, including Boruchow. 

“The fact that management is raising the full year by more than the 2Q beat speaks to the momentum and optimism behind the business right now,” the analyst said. 

The analyst sees a strong recovery continuing to play out but cautiously noted that the risk/reward is not as favorable as it was earlier in the year.

Siegel, who has a Market Perform rating, noted that the revenue growth and valuation of Ulta put the company at a premium to peers.

“That said, we believe ULTA presents a healthy but lighter level of growth than previously,” Siegel said.

Telsey highlights the fact that Ulta Beauty has raised its guidance for two straight quarters as a positive sign moving forward.