Piper Jaffray Raises Price Target on Ulta Salon (ULTA) to $290; Reiterates Overweight
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Piper Jaffray reiterated an Overweight rating on ULTA Salon (NASDAQ: ULTA), and raised the price target to $290.00 (from $250.00), ahead of the company's 2Q earnings report. Most large beauty wholesale companies have now reported and the results have pointed to ongoing share shift toward specialty multi-brand environments. Recent checks have noted above validate current run rate performance. However, they also suggest the potential rise of competition many years down the road.
Analyst Stephanie Wissink commented, "The Q2 reporting cycle has included numerous points of validation into Ulta's brand/ category mix model, positioning across mass & prestige, and services attributes. We are raising our estimates for 1) improved brand mix and the roll-out of prestige mega brands Estee Lauder & Clinique; 2) incremental basket value potential; and 3) persistently strong double digit traffic growth. Many brands within the Ulta prestige cosmetics section today dominate a sub-category niche (i.e., eyes); Estee Lauder and Clinique bring diversified mixes of product across sub-categories (make-up, skin) and tend to have strong basket value/brand tie-rates. As we consider the growing desire among brands to be found in Ulta stores, we see the balance of power shifting in favor of Ulta's margin enhancement potential, possibly at a faster rate than previously assumed, justifying a higher multiple. PT to $290 ($250 prior)."
Shares of ULTA Salon closed at $274.55 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
Related EntitiesPiper Jaffray, Earnings
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