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How Ulta Beauty Performed in 3Q17

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How Ulta Beauty Performed in 3Q17 PART 1 OF 5

How Ulta Beauty Stock Has Performed since 3Q17 Results

Impact of 3Q results

Ulta Beauty (ULTA) stock fell 4.1% on December 1 in reaction to the company’s fiscal 3Q17 results, which were announced after the close of financial markets on November 30. The company exceeded analysts’ earnings expectations and was almost in line with analysts’ sales estimates for fiscal 3Q17. However, investors were disappointed with the lower margins of the leading beauty retailer.

Ulta Beauty stock recovered 4.3% on December 4 as the US Senate passed the tax reform bill, which is expected to bring down the corporate tax rate from 35% to 22%. The retail sector, one of the sectors that pays the highest in taxes, is expected to benefit from this tax reform.

How Ulta Beauty Stock Has Performed since 3Q17 Results

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YTD movement

Ulta Beauty stock has fallen 13.1% on a YTD (year-to-date) basis as of December 4. The beauty retailer has underperformed the S&P 500 Index, which has risen 17.9% since the start of 2017.

Several analysts and investors have been concerned about the impact of rising competition in the beauty sector on Ulta Beauty’s performance. The company has been consistently delivering a double-digit sales growth rate. However, the growth rate in the company’s top line has been decelerating over recent quarters.

Impact on price target

Following the company’s fiscal 3Q17 results, several analysts revised their price target for Ulta Beauty stock. On December 1, Wells Fargo lowered its price target for Ulta Beauty stock to $220 from $242. Cowen and Company cut its price target to $246 from $336. Morgan Stanley cut its price target to $235 from $245. Deutsche Bank lowered its price target to $225 from $250. BMO Capital cut its price target for Ulta Beauty stock to $225 from $235. Stifel lowered its price target to $230 from $240.

As of December 4, the average 12-month price target for Ulta Beauty stock was $252.45, reflecting an upside potential of 14.0%.

Series overview

This series on Ulta Beauty’s fiscal 3Q17 results will discuss in detail the company’s earnings, sales, and margins. The series will also discuss the impact of the company’s fiscal 3Q17 performance on its valuation.

We’ll take a closer look at the company’s fiscal 3Q17 earnings in the next part of this series.

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