2017-05-26 12:59:26 | Ulta hits record highs after beating on top and bottom linesShares of Ulta Beauty (ULTA) hit record highs today after beating analysts' quarterly estimates on both the top and bottom lines. At the same time, the beauty products retailer guidance for the current quarter at the low end of analysts' estimates. Following the report, many analysts offered bullish commentary. WHAT'S NEW: After the market close on Thursday, Ulta Beauty reported Q1 earnings per share of $2.05, including 14c tax rate benefit on revenue of $1.32B, handily beating estimates calling for $1.80 and $1.27B, respectively. Comparable sales increased 14.3% for the quarter, driven by 8.7% transaction growth and 5.6% growth in average ticket, and retail comparable sales increased 10.9%, including salon comparable sales growth of 9.9%. E-commerce sales grew 70.9% to $104.3M. Looking ahead, Ulta forecast current quarter EPS of $1.72-$1.77 on revenue of $1.257B-$1.278B, at the low end of analysts' estimates of $1.77 and $1.27B, respectively. The retailer also sees SSS, including e-commerce, up 10%-12%. The company also raised its fiscal year 2017 EPS growth to mid-twenties from low-twenties, against analysts' estimates of $8.09B. Ulta additionally raised its SSS growth view, including ecommerce, to 9%-11% from 8%-10% and its ecommerce growth view to 50% from 40%. 'STRONG' CONSUMER RESPONSE: Following the earnings report, Piper Jaffray analyst Erinn Murphy raised her price target for Ulta to $333 and maintained an Overweight rating on the name, citing the company's "strong" Q1 results. She said Ulta's comp growth of 14.3% reflects "strong consumer response to the concept, brand mix and marketing," which is unlikely to change in the near term. She added that the company's 2018 guidance is "likely beatable" citing potential upside from an ongoing traffic shift from department stores, brand mix, expanding basket size and consumer loyalty. In addition, Oppenheimer analyst Rupesh Parikh reaffirmed his Outperform rating and price target of $330, saying the company "handily exceeded" investor expectations. He said he expects continued improvement of Ulta's fundamental backdrop driven by the company's partnership with Estee Lauder (EL), the strong health of beauty trends and increasing department store challenges. Baird Analyst Mark Altschwager also maintained an Outperform rating and raised his price target to $335, citing the company's ability to remain "unfazed" by the difficult retail landscape through its offensive strategy and customer loyalty. He added that strong beauty category growth, shifting customer traffic, and Ulta's rising market power continue to benefit the company and he recommends investors get aggressive on dips. Additionally, JPMorgan analyst Christopher Horvers reaffirmed his Overweight rating and raised his price target to $320 from $310, saying while the company's gross margin was below his forecast, Q1 results were "impressive" and he sees rising benefits from Ulta's continuing expansion of boutiques and the M.A.C launch, the company's ability to engage consumers online and its loyalty program. "ULTA remains at the top of the narrow first bucket of retail -- the expensive, growth-oriented and Amazon (AMZN)-safe stocks," he said. However, Buckingham analyst Kelly Halsor downgraded Ulta to Neutral from Buy citing more balanced risk/reward at current levela, but raised her price target to $330 from $325. She said she sees no sign of a slowdown in the company's business near-term but believes that further upside to Ulta's guidance has largely been priced in. Halsor advised investors to remain opportunistic around valuation. PRICE ACTION: Ulta rose 3.6% to $303.47 in afternoon trading. | |
---|