ULTA Salon (ULTA) PT Lowered to $600 at Raymond James

Raymond James analyst Olivia Tong lowered the price target on ULTA Salon (NASDAQ: ULTA) to $600.00 (from $615.00) while maintaining a Strong Buy rating.

The analyst commented, "ULTA reported F1Q results after yesterday’s close, with EPS of $6.88 beating RJe/consensus $6.80. Comps +9% y/y and sales +12% were slightly ahead of our expectations, though operating expenses were higher than we expected, offset by higher net interest income and a lower tax rate, which drove the EPS beat. The higher expenses are a result of promotion levels that are up y/y though still below pre-COVID levels and organized theft. The latter has become a challenge hitting all retail, but we suspect it is a more pronounced problem for beauty, particularly in prestige fragrances, as its combination of small cube, high value, and strong resale opportunity has made it an appealing target unfortunately. While these factors are weighing on ULTA’s margins, we do not think their challenges are unique to the company, while it has the capabilities and willingness to invest, and is best positioned within a growing beauty category across a wide range of macro backdrops. As a result, we would use potential weakness in the shares as an opportunity, and maintain our Strong Buy rating."

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