Ulta Beauty Stock Surges: Key Price Levels to Watch

Ulta Beauty (ULTA) shares traded sharply higher in extended trading on Thursday after the cosmetics retailer surpassed Wall Street’s earnings expectations and raised its outlook. The stock sits poised to break above the upper trendline of an ascending triangle after the company’s upbeat quarterly results, setting the stage for a potential upside reversal. Investors should watch key overhead areas on Ulta Beauty's chart around $435, $465, and $497, while also monitoring a crucial support level near $412.

Ulta Beauty reported net income for the quarter ended May 4 of $313.1 million, or $6.47 per share, compared with $347.1 million, or $6.88 per share, a year earlier. Net sales rose slightly to $2.73 billion from $2.63 billion a year earlier. The company lowered its guidance for the fiscal year. Ulta reported that it is now expecting net sales in the range of $11.5 billion to $11.6 billion and comparable sales in the range of 2% to 3%. It had previously guided to full-year net sales of $11.7 billion to $11.8 billion and comparable sales of 4% to 5%.



The company's 1.6% comp sales growth, though a slowdown from last year, was in line with expectations. More importantly, Ulta Beauty raised its full-year net sales guidance to $11.5 billion to $11.6 billion and expects comparable sales growth of 2% to 3%. This revised outlook signals a return to growth momentum, which could drive the stock out of its falling wedge and towards resistance levels at $435, $465, and $497.



Berkshire Hathaway's investment, valued around $266.3 million as of June 30, 2024, indicates that the conglomerate sees Ulta Beauty as a promising investment. This news can boost investor confidence, as Berkshire Hathaway's involvement suggests that Ulta Beauty is undervalued and has strong potential for growth. The investment comes despite Ulta Beauty's recent stock price decline, indicating that Berkshire Hathaway is looking beyond short-term market fluctuations and focusing on the company's fundamentals.

Analysts' price targets and ratings for Ulta Beauty align with the identified key price levels, suggesting potential upside for the stock. According to Investopedia, the average analyst price target for ULTA is $428.84, an increase of 9.16% from the latest price. This target is within the range of the key overhead areas identified around $435, $465, and $497. Additionally, the average analyst rating for ULTA is a "Buy," indicating overall bullish sentiment.



Ulta Beauty's bullish outlook, driven by new brands, digital tools, in-store events, and Berkshire Hathaway's investment, supports a trend reversal indicated by the falling wedge formation on its chart. As the company continues to execute its transformational agenda and reinforce its leadership position, investors should monitor key price levels and remain optimistic about its growth prospects.



In conclusion, Ulta Beauty's strong earnings performance, bullish outlook, and Berkshire Hathaway's investment have driven its stock price higher and suggest a potential upside reversal. Investors should watch key overhead areas around $435, $465, and $497, while also monitoring support near $412. Analysts' price targets and ratings for Ulta Beauty align with the identified key price levels, further indicating potential upside for the stock. As Ulta Beauty continues to execute its growth strategies, investors can remain optimistic about its long-term prospects.