Ulta Beauty, Inc. (ULTA) reported strong Q2 results on Wednesday, strengthening its leadership position in the beauty category market. I am bullish on the stock.
“This performance reflects the recovery of the beauty category, investments and choices we’ve made over the last year to adapt to the market disruption and strengthen our leadership position, and the ongoing efforts of our associates to deliver great experiences for our guests,” said Dave Kimbell, chief executive officer. “Our value proposition is strong, and we are evolving and innovating to lead in the new beauty landscape, capture additional market share, and drive profitable growth.”
Net sales came in at $2 billion, up from $1.2 billion from a year ago. Comparable sales rose 56.3%, while net income was $250.9 million, or $4.56 per diluted share.
All numbers beat analysts’ estimates, and the company raised its outlook for the year. (See ULTA stock charts on TipRanks)
The solid Q2 sales come on the heels of strong Q1 sales, when comparable sales increased 65.9%, while net income came in at $230.3 million, or $4.10 per share.
In that March, long-time and well-respected Ulta CEO Mary Dillon announced that she would be stepping down from her role in June.
Apparently, the new leadership has been able to keep things running smoothly, helped by the re-opening of the economy and the pent-up demand for Ulta’s products.
Wall Street was pleased with Ulta’s Q2 results, sending its shares sharply higher in after-hours trade on Wednesday afternoon. Ulta shares have soared 36% year-to-date, beating the S&P 500, which has gained 21%.
Wall Street’s Take
The 21 analysts following the stock are moderately optimistic for Ulta’s shares over the next 12 months. The stock has a Moderate Buy rating, based on 13 Buys and eight Holds.
Ulta’s average price target of $440.80 implies 14.9% upside, with a high forecast of $490 and a low forecast of $345.
TipRanks assigns a Perfect 10 Smart Score to the stock, citing a bullish sentiment among investors, bloggers, and analysts, along with strong technicals.
The stock is an excellent short-term trade, on the long side of the market.
Disclosure: At the time of publication, Panos Mourdoukoutas did not have a position in any of the securities mentioned in this article.
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