Ulta Beauty (ULTA) Stock Pops on Beat-and-Raise and New Buyback Plan, Analysts Positive

Shares of Ulta Beauty (NASDAQ: ULTA) are up more than 2% in premarket trading Friday after the company reported financial results for the fourth quarter.

Ulta Beauty posted Q4 EPS of $5.41, above the consensus estimates of $4.61. Net sales came in at $2.73 billion in the period, beating the expected $2.69 billion. Comparable sales rose by 21.4% in the quarter, compared to the expected growth of 19.9%.

Gross margin stood at 37.6%, above the consensus estimates of 36.5%. Merchandise inventories generated $1.5 billion, above the analyst estimates of $1.45 billion. SG&A expense was reported at $650 million, slightly above the expected $649.2 million.

Total location count was reported at 1,308, up 0.5% QoQ and just above the analyst expectations of 1,306. Ulta Beauty reported +6 net new stores, in line with the consensus estimates.

For the full fiscal 2023, Ulta Beauty expects EPS in the range of $18.20 to $18.70, compared to the consensus estimates of $18.24. The company expects net sales in the range of $9.05 billion to $9.15 billion, compared with the expected $9.2 billion.

ULTA expects comparable sales growth between 3-4% for the year, below the estimated growth of +4.3%. The company expects to add +50 net new stores in the year.

Ulta Beauty said fourth-quarter EPS results included a $0.05 benefit because of income tax accounting for stock-based compensation, compared to the year-ago benefit of $0.02.

The company’s board also authorized a new stock buyback of $2 billion.

BofA analyst Lorraine Hutchinson lowered the price target to $410.00 per share from the prior $450.00 and remained on the sidelines.

“We retain our Neutral rating, as we think the long-term sales and margin opportunities are balanced by the quick recovery in the multiple,” Hutchinson wrote in a client note.

Raymond James analyst Olivia Tong reiterated an Outperform rating.

“We expect continued strength driven by outsized sales growth opportunities, more than justifying a valuation multiple towards the upper end of retail peers,” Tong wrote in a client note.

By Senad Karaahmetovic | [email protected]

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