On Tuesday, Oppenheimer adjusted its price target for ULTA Salon (NASDAQ: ULTA), shares reducing it to $475 from $500, while maintaining an Outperform rating on the stock.
The firm anticipates that the company will revise its full-year guidance downward during the Q1 results announcement scheduled for May 30, 2024. This expectation follows cautious statements made at a competitor’s conference in early April, which highlighted challenges within the category and increased competition.
The revised price target is a result of Oppenheimer adopting a more conservative outlook for the remainder of the fiscal year 2024, factoring in the possibility of slower comparable store sales growth.
ULTA’s shares are currently trading at approximately 16 times Oppenheimer’s updated earnings estimate for FY24, which is in line with the historical low to mid-teens range.
Oppenheimer’s analysis suggests there could be short-term downside risks to ULTA’s stock price, potentially reaching the $370 range, based on historical trough levels. Despite the negative sentiment surrounding ULTA shares and the expected decrease in guidance, the firm suggests that investors consider taking advantage of any price declines that may occur.
InvestingPro Insights
As the beauty industry faces headwinds, ULTA Salon’s financial health and market performance offer a mixed picture heading into its Q1 2024 report. The company’s market capitalization stands at $18.93 billion, reflecting its significant presence in the sector. With a P/E ratio of 15.04, ULTA trades at a premium relative to its earnings, which might cause some investors to exercise caution. However, a noteworthy InvestingPro Tip points out that ULTA’s management has been assertively repurchasing shares, a sign of confidence in the company’s value. Additionally, the RSI indicator suggests that the stock may be in oversold territory, hinting at a potential rebound.
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From a financial standpoint, ULTA’s revenue grew by 9.78% over the last twelve months as of Q4 2024, outpacing the quarterly growth rate of 10.15%. This indicates a steady demand for its products despite broader market challenges. The company’s gross profit margin stands strong at 42.95%, showcasing its ability to maintain profitability. It’s also important to note that ULTA is trading near its 52-week low, and with a fair value estimation by InvestingPro at $471.39, there might be…
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