Wells Fargo Upgrades ULTA Salon (ULTA) to Outperform Post Q3

November 30, 2012 7:49 AM EST
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Price: $266.22 +0.04%

Rating Summary:
    12 Buy, 10 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Wells Fargo upgraded ULTA Salon (NASDAQ: ULTA) from Market Perform to Outperform and raised its valuation range from $98-102 to $110-119.

The firm comments, "We think that the higher square footage growth for 2013 (125 new stores planned vs. 101 in 2012) should support above-average comp and EPS growth for the next several years, longer than we previously anticipated. Over the next few years, the percentage of young stores in the comp base will increase significantly, which could keep comps in the high single digits, as young stores post above-average comps as they mature (see Exhibit 1). In addition, the potential roll out of mega brands, Lancome and Clinique (in 79 and 42 doors, respectively, at the end of Q3), the new loyalty program and CRM systems could sustain above average comp growth. In the near term, stronger in-stock levels vs. last year could also drive comps. We are raising our 2012E/2013E EPS to $2.66/$3.38 from $2.60/$3.28, and our valuation range to $110-119 (from $98-102) based on 26-28x our 2014E EPS of $4.24, in line with the EPS growth rate."

For an analyst ratings summary and ratings history on ULTA Salon click here. For more ratings news on ULTA Salon click here.

Shares of ULTA Salon closed at $93.15 yesterday.

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