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Will Ulta Beauty’s Stock Performance Impress in 2019?

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Jan. 28 2019, Published 1:15 p.m. ET

Stock up over 18% in 2019

The stock of beauty retailer Ulta Beauty (ULTA) has risen 18.7% since the start of 2019, outperforming the 6.3% rise in the S&P 500 Index as of January 25. Ulta Beauty stock rose 9.5% in 2018, compared to the 6.2% fall in the S&P 500 Index. The stock would have delivered higher returns last year if not for its lackluster guidance for the fourth quarter of fiscal 2018, issued in December.

Ulta Beauty delivered better-than-expected earnings for the third quarter of fiscal 2018[1. Q3 of fiscal 2018 ended on November 3] while sales were in line with analysts’ expectations. However, the company’s fourth-quarter guidance failed to impress investors and pulled the stock down 13.1% on December 7.

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Do analysts see further upside?

Following the company’s fiscal 2018 third-quarter results, J.P. Morgan and Baird lowered their price targets for Ulta Beauty stock while BMO raised its price target on December 7.

On December 11, Oppenheimer lowered its price target for Ulta Beauty stock to $340 from $375. On January 2, Wells Fargo lowered its price target to $280 from $328. On January 4, UBS cut its price target to $310 from $335.

As of January 25, the 12-month price target for Ulta Beauty stock was $314.27. This price estimate implies an upside potential of about 8%, compared to the closing price of $290.72 as of January 25.

As of January 25, Ulta Beauty stock was rated a “buy” by 19 out of 28 analysts and a “hold” by nine analysts.

Ulta Beauty opened 42 stores in the third quarter of fiscal 2018, in line with the company’s plan to open 100 new stores in full-year fiscal 2018, which ends on February 2, 2019. The company ended fiscal 2018’s third quarter with 1,163 stores.

The company is moderating its store opening plans and intends to open 80 stores in fiscal 2019, 75 stores in fiscal 2020, and 70 stores in fiscal 2021.

We’ll discuss sales expectations for Ulta Beauty in the next part of this series.

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