Shares of Ulta Beauty (NASDAQ: ULTA) are gapping up 5% after results blew out Street expectations as EPS of $4.10 more than doubled the consensus of $1.90. Comps were up 65.9% Y/Y, with transactions up 52.5% and the average ticket up 8.8%. Compared to pre-pandemic levels, total sales increased 11.2% vs. 2019 while comps increased 7%.

Dave Kimbell, president of ULTA commented, “As increasing consumer confidence, the relaxation of restrictions, and a desire for newness drive increased engagement with the beauty category, our differentiated model, combined with our ongoing efforts to create meaningful guest connections, position us well to lead through the category recovery.”

The substantial upside is leading analysts to raise price targets across the board but with some giving more credit for business transition than others. The bulk of price targets are moving higher than the $360 level with analysts like Ike Boruchow from Wells Fargo arguing for a higher multiple as the company emerges from the pandemic stronger and more profitable: "With bears remaining focused on ULTA's margin headwinds, we see today's solid GM beat and margin raiseas a key driver for bulls to argue for higher multiples on ULTA (as margins have been the wildcard, while top-line recovery has been more of an assumed dynamic). We are meaningfully raising our EPS to $12.00/$14.60 (previously $9.75/$12.50) and likewise moving our PT higher to $375 (from $365) based on 25-26x our FY22 EPS estimate."

However, other analysts remain focused on valuation and weakness in Makeup, seeing shares either fully or near fully valued. For example, Mark Astrachan from Stifel is looking for more proof that internal metrics can exceed 2019 levels, stating "We meaningfully lift our F2021-F2022 EPS estimates mainly reflecting stronger comp growth and gross margin and our price target to $330, 24x F2022E EPS. From after-hours levels, we view ULTA shares as trading near fair value – 25x revised F2022E EPS. That said, we think better cost leverage – gross margin expansion from F2021 levels now modeled to be modestly above F2019 and limited SG&A expense deleverage given mix and likely rising investment levels – would drive upside relative to our updated estimates."