Evercore ISI on ULTA Salon (ULTA) Knock-On Impact: 'we see a buying opportunity for COTY'
Evercore ISI analyst Michael Binetti reiterated an Outperform rating and $630.00 price target on ULTA Salon (NASDAQ: ULTA).
The analyst comments "Beauty stocks are trading off following Ulta’s statement about a slowdown in the U.S. market, across price points and segments, that’s “earlier and a bit bigger than thought.” Retail sales for U.S. Mass Beauty has slowed to 3-4% through March 24, v. the 7% this past 4Q (page 3). This read includes Ulta and Amazon but captures mass brands only ─ those that also distribute through Walmart, Target and drugstores ─ and therefore excludes so-called “prestige” brands. This analysis captures actual retail sales in Amazon ─ not projections from scrapping the website ─ but is limited to 1st -party sales. By excluding Amazon marketplace and/ or distributor sales, we think this series should more closely align with sell-in or reported sales. As shown on page 8, this universe captures an additional 30% of the mass beauty market in the U.S. v. prior “scannertracked” channels. Given today’s trading, we see a buying opportunity for COTY – retailers’ reorders of fragrances are solid, albeit subject to the law of bigger numbers, as per our recent meeting with CEO and CFO─ and for EL, 1) the launch of Clinique on Amazon last week is a strategic positive as we argued months ago; 2) China online data is encouraging"
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Shares of ULTA Salon closed at $519.68 yesterday.