Ulta Beauty Price Target Raised to $550 at DA Davidson

DA Davidson raised Ulta Beauty's price target to $550 from $485 and maintained a Buy rating. The firm's beauty product overlap study found that Ulta has more differentiation versus competitors than seen in the past. While the beauty space remains competitive, the worst appears to be behind, the analyst noted.

Investment research firm DA Davidson has boosted its price target for Ulta Beauty (NASDAQ: ULTA) to $550 from $485, while retaining a Buy rating on the stock. This new target represents a potential upside from the current trading price of $477.79, with the stock nearing its 52-week high of $491.98 [1].

The decision is based on a revised beauty product overlap study conducted by DA Davidson, which analyzed Ulta’s best-selling products and compared their availability and pricing at competitors such as Sephora, Amazon (NASDAQ: AMZN), Walmart (NYSE: WMT), and Target. The study revealed that Ulta now exhibits greater product differentiation compared to its competitors, aligning with DA Davidson’s investment thesis that competitive pressures on Ulta Beauty are easing [1].

While DA Davidson acknowledges ongoing competition in the beauty retail sector, the firm concludes that "the worst appears to be behind us" for Ulta Beauty. Additionally, the company announced the immediate departure of CFO Paula Oyibo, with Chris Lialios stepping in as interim CFO. Ulta Beauty is conducting an external search for a permanent replacement with international market experience to support its expansion plans into Mexico and the Middle East [1].

Despite these changes, Ulta Beauty has reaffirmed its fiscal 2025 guidance, projecting comparable store sales growth between 0% and 1.5%, an operating margin between 11.7% and 11.8%, and diluted earnings per share between $22.65 and $23.20. Several other analysts have also adjusted their price targets and ratings. BofA Securities raised its target to $500, citing potential margin pressures due to increased investments in advertising and store labor but suggesting room for outperformance. Evercore ISI maintained its Outperform rating with a $490 target, viewing the CFO search as a positive sign. William Blair reiterated a Market Perform rating, noting limited upside potential as Ulta shares approach the higher end of their trading range. Citi maintained its neutral rating and $450 target, emphasizing the company’s conservative fiscal outlook amid macroeconomic uncertainties [1].

These developments highlight a period of strategic transition for Ulta Beauty as it navigates market challenges and leadership changes.

References:
[1] https://www.investing.com/news/analyst-ratings/ulta-beauty-stock-price-target-raised-to-550-from-485-at-da-davidson-93CH-4124470