Goldman Sachs Group, Inc. (The) Downgrades Ulta Beauty Inc. (ULTA) to Buy
Ulta Beauty Inc. (NASDAQ:ULTA) was downgraded by equities researchers at Goldman Sachs Group, Inc. (The) from a “conviction-buy” rating to a “buy” rating in a research note issued to investors on Monday. They presently have a $267.00 target price on the specialty retailer’s stock, down from their previous target price of $290.00. Goldman Sachs Group, Inc. (The)’s price target suggests a potential upside of 32.00% from the company’s current price.
The analysts wrote, “Goldman Sachs Conviction List.”Cosmetics accounted for approximately 51 percent of Ulta’s total revenue last year but industry sources are now calling for “lesser innovation” in the space, Fassler commented in a research report. While the beauty industry is also seeing greater innovation in hair-care and skincare, the growth in these two categories won’t be large enough to offset a slowdown in cosmetics. However, this doesn’t imply that investors should be concerned as the company remains a share gainer in the overall beauty space.In fact, investor concerns are either “misguided or premature” as there is no reason to believe Ulta’s core value proposition is under threat, Fassler added (see his track record here). For the time being at least it would be wrong to assume that Amazon.com, Inc. (NASDAQ: AMZN) offers a compelling alternative or that the addition of rival brands to Amazon’s platform is imminent.Bottom line, stabilization in Ulta’s revenue and ability to achieve same-store sales guidance remains a base case scenario. But weaker than prior trends in the overall beauty space implies a reduction in Ulta’s price target is necessary although the stock still boasts an “appealing”
ULTA has been the subject of several other reports. Jefferies Group LLC set a $350.00 target price on Ulta Beauty and gave the company a “buy” rating in a research note on Monday, August 14th. Piper Jaffray Companies reiterated a “buy” rating and set a $330.00 price target on shares of Ulta Beauty in a research note on Monday, August 21st. Stifel Nicolaus cut their price target on Ulta Beauty from $325.00 to $270.00 and set a “hold” rating for the company in a research note on Monday, August 21st. Morgan Stanley cut their price target on Ulta Beauty from $313.00 to $245.00 and set an “equal weight” rating for the company in a research note on Monday, August 28th. Finally, Robert W. Baird set a $335.00 price target on Ulta Beauty and gave the company a “buy” rating in a research note on Wednesday, August 23rd. One analyst has rated the stock with a sell rating, thirteen have assigned a hold rating and twelve have given a buy rating to the stock. The company has a consensus rating of “Hold” and an average price target of $276.33.
Shares of Ulta Beauty (ULTA) opened at 202.28 on Monday. Ulta Beauty has a one year low of $187.96 and a one year high of $314.86. The stock has a 50 day moving average price of $220.31 and a 200-day moving average price of $262.79. The company has a market capitalization of $12.43 billion, a price-to-earnings ratio of 26.93 and a beta of 0.57.
Ulta Beauty (NASDAQ:ULTA) last issued its earnings results on Thursday, August 24th. The specialty retailer reported $1.83 EPS for the quarter, beating the Thomson Reuters’ consensus estimate of $1.78 by $0.05. The company had revenue of $1.29 billion during the quarter, compared to the consensus estimate of $1.29 billion. Ulta Beauty had a return on equity of 29.33% and a net margin of 8.84%. The firm’s revenue for the quarter was up 20.7% compared to the same quarter last year. During the same period last year, the business posted $1.43 EPS. On average, equities research analysts expect that Ulta Beauty will post $8.38 EPS for the current year.
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In related news, Director Michael R. Macdonald purchased 2,000 shares of the stock in a transaction that occurred on Tuesday, August 29th. The shares were bought at an average price of $208.37 per share, with a total value of $416,740.00. Following the acquisition, the director now owns 6,224 shares of the company’s stock, valued at approximately $1,296,894.88. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this link. Also, Director Charles Heilbronn purchased 127,889 shares of the stock in a transaction that occurred on Friday, October 13th. The stock was bought at an average cost of $195.21 per share, for a total transaction of $24,965,211.69. The disclosure for this purchase can be found here. 5.20% of the stock is owned by company insiders.
Large investors have recently bought and sold shares of the stock. Iberiabank Corp raised its holdings in shares of Ulta Beauty by 9.2% in the 2nd quarter. Iberiabank Corp now owns 4,549 shares of the specialty retailer’s stock worth $1,307,000 after purchasing an additional 383 shares during the period. Covenant Asset Management LLC raised its holdings in shares of Ulta Beauty by 1.9% in the 2nd quarter. Covenant Asset Management LLC now owns 3,676 shares of the specialty retailer’s stock worth $1,056,000 after purchasing an additional 70 shares during the period. Dimensional Fund Advisors LP raised its holdings in shares of Ulta Beauty by 2.8% in the 1st quarter. Dimensional Fund Advisors LP now owns 214,001 shares of the specialty retailer’s stock worth $61,039,000 after purchasing an additional 5,854 shares during the period. CIBC World Markets Inc. raised its holdings in shares of Ulta Beauty by 63.0% in the 2nd quarter. CIBC World Markets Inc. now owns 9,994 shares of the specialty retailer’s stock worth $2,872,000 after purchasing an additional 3,861 shares during the period. Finally, GSA Capital Partners LLP bought a new stake in shares of Ulta Beauty in the 2nd quarter worth approximately $552,000. 87.70% of the stock is currently owned by institutional investors.
About Ulta Beauty
Ulta Beauty, Inc is a holding company for the Ulta Beauty group of companies. The Company is a beauty retailer. The Company offers cosmetics, fragrance, skin, hair care products and salon services. The Company offers approximately 20,000 products from over 500 beauty brands across all categories, including the Company’s own private label.
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