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We came across a bullish thesis on Ulta Beauty, Inc. (ULTA) by @wallstengine on X (Twitter). In this article, we will summarize the bulls’ thesis on ULTA. Ulta Beauty, Inc. (ULTA)'s share was trading at $407.04 as of 23rd May. ULTA’s trailing and forward P/E were 16.06 and 17.89 respectively according to Yahoo Finance.
A close-up of a customer's hands selecting beauty products from an online retailer.
Ulta Beauty (ULTA) has been upgraded to Buy by Goldman Sachs with a price target raised to $423 from $384, marking a turning point in sentiment after a cautious stance since December 2022. The firm's previous hesitation stemmed from concerns about a slowdown in beauty category growth and erosion in prestige market share. However, entering FY25, Goldman believes these headwinds have bottomed, setting the stage for a rebound. The upgrade is driven by multiple catalysts.
First, comp momentum is expected to accelerate in Q1 and throughout FY25, backed by encouraging quarter-to-date trends, an uptick in monthly active users since November 2024, and increased consumer engagement, as evidenced by rising search traffic around ULTA’s popular “21 Days of Beauty” campaign.
Second, competitive pressures from peers like Sephora may be easing, with ULTA showing improvement in new product rollouts, a key factor in regaining share and maintaining relevance with beauty consumers.
Third, Goldman sees the company’s FY25 guidance, especially on margin assumptions, as conservative. Given ULTA’s history of outperforming on SG&A efficiency, there could be meaningful upside to profitability.
Finally, from a valuation standpoint, the stock trades at 15.8x forward earnings, a discount to its three-year average of 17.9x, making it an attractive entry point. With consumer engagement improving, competitive dynamics stabilizing, and management conservatism in guidance offering potential beats, ULTA presents a compelling risk/reward setup for investors. Goldman’s view signals a potential inflection in sentiment, as multiple tailwinds align to support reacceleration in both fundamentals and the stock’s multiple.
Previously, we have covered Ulta Beauty, Inc. (ULTA) in January 2025 wherein we summarized a bullish thesis by somalley3 on the Value Investing subreddit. The user highlighted the company’s strong brand, loyal customer base, and unique positioning as the only retailer combining mass-market and prestige beauty products. Despite short-term challenges and a post-pandemic slowdown, the article argued that ULTA’s solid fundamentals, efficient capital allocation, and expansion opportunities—particularly through Target and potential international growth—made the stock undervalued and attractive for long-term investors. Since our last coverage, the stock is down 6.41% as of 26th May.