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Ulta Salon Cosmetics and Fragrance Inc.ULTATOP PICKApr 20, 2018
Don LatoStock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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They just reported an excellent quarter last night, but spiked after hours, plunged, then rebounded today. A yo-yo. Why? How? Up and down then flat. They had a massive earnings and sales beats. Same-store sales were up 15.6% vs. 8.7% expected. And they faced tough comps from last year. RPS and revenue forecast FY 2023 guidance topped expectations. They're opening 25-30 new stores, while Wall Street expected 49. Problem is that expectations were set high, and today saw the SVB crash and a bearish market. Impressive growth areas: skin care, fragrance and ecommerce/in-store pick-up. Rewards program boasts 40.2 million members. American luxury spending will remain healthy, but will moderate. Not perfect, but pretty good.
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Premium contentEstee Lauder is a consideration, but it trades at 44.9x PE and the stock locks fully valued now. In contast, Ulta looks reasonable at a 26.4x valuation. True, Ulta is also trading at current highs, but it could have a little more upside. The 14 analysts who recommend a buy and the seven who hold agree by placing a $460.37 price target on ULTA-Q. That's nearly 14% upside as the year starts. Also, Ulta boasts a strong record of four blow-out beats last year. Consumers hold a lot of cash and, after being cooped up during Covid, are dying to get out and meet people again. This is the way to play the coming party.
(A Top Pick Sep 02/20, Up 52%) People are buying makeup and perfumes again. They did well with skincare and their deal with Target during the pandemic. Beauty and cosmetics are coming back. They will perform quite well if things stay open.
Cole Kachur
A great combination of new store openings and same-store sales increase. They own 1000 stores and plan to open another 100 this year. Multiples came down with fears that Amazon was going to enter the cosmetic space, making it very reasonably priced now. Yield 0%. (Analysts’ price target is $246.95 )