Ulta Beauty is a leading American specialty retailer focusing on cosmetics, fragrance, skincare, salon services, and hair care products. It has thousands of stores in the country and also sells its products on its website and mobile applications.Â
Ulta has a leading market share in an industry that represents about $181 billion in annual sales. This is a highly fragmented industry, with the biggest retailers like Walmart and Target having a big market share.Â
Ulta Beauty has over 1,300 stores in the United States, a number that is growing gradually. It hopes to get its store count to between 1,500 and 1,700 in the next few years.Â
The company’s competitive advantage is the number of stores it owns and the variety of products it sells. It also has a popular loyalty program that rewards users for transacting in its stores and websites.Â
Most of Ulta Beauty’s sales come from its cosmetics business, followed by skincare, haircare products, and fragrances.Â
Ulta Beauty stock was trading at $423, while its HypeIndex metric rose to 119%.Â
You can find more about Ulta Beauty stock here.
Positive hype
Ulta Beauty has had substantial positive hype after Warren Buffett, the best investor in our generation, invested in the company. He believes that it is a well-known brand that is relatively cheap.
Ulta Beauty’s business is doing well in a challenging environment. Its revenue rose to $2.53 billion from $2.4 billion in the same quarter last year. Its comparable sales rose by 0.5%.
The company is still opening new stores, which it believes will help to grow sales over time. Its net store openings in the last quarter stood at 26. It has opened 52 stores this year.Â
Ulta Beauty’s profitability improved even as some key costs, especially labor, increased. Its earnings per share rose to $5.4.
Analysts are optimistic that Ulta Beauty’s growth will resume in 2025 as inflation and interest rates fall. Its 2025 revenue is expected to be $11.6 billion, higher than the $11.2 billion it will make this year. Ulta has a long record of beating analysts' estimates.
Valuation metrics show that the company is fairly valued, partly because its growth is not all that strong. It has a forward price-to-earnings ratio of 18.2, lower than the S&P 500 index average of 20.
The average Ulta Beauty stock forecast by analysts is $439, higher than the current $423.
Negative hype
Ulta Beauty and other specialty retailers are facing substantial competition from Amazon and Walmart.Â
The company has also seen its wage costs accelerating as states have increased the minimum wage. This trend has had an impact on its profitability.
Ulta Beauty’s inventory has been growing, which could present a big risk. It ended the last quarter with over $2.36 billion in inventories, up from $1.7 billion in January.Â
Ulta Beauty is facing competition from direct sellers, who have become popular among young people.
Ulta Beauty stock price analysis
The daily chart shows that the ULTA stock price has bounced back after forming a slanted double-bottom pattern around the $340 level. It has now soared above the neckline at $411, its neckline.
Ulta Beauty stock has moved above the 200-day and 50-day Exponential Moving Averages (EMA), which are about to cross each other and form a golden cross.
It has also formed a break and retest pattern by moving back to $411. A break and retest is one of the most bullish patterns in the market.Â
Therefore, the stock will likely continue rising as bulls target the next key resistance point at $500, which is about 18.4% above the current level.
If you’d like to receive more trending stocks straight to your inbox, check out our premium plans. Alternatively, if you’d like to hear more about the services offered by HypeIndex, you can check out our FAQ page.
HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.
Comentários