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BofA Securities analyst Lorraine Hutchinson reiterated the Neutral rating on Ulta Beauty, Inc. ULTA with a price objective of $380.
Ulta Beauty plans to open 200 new stores as part of a long-term strategy announced this week. At its investors' day Wednesday (Oct. 16), the beauty retailer said it hopes to open the new locations over the next three years, bringing its store count to more than 1,800, according to a press release.
Ulta Beauty announces an ambitious strategic plan and new long-term financial targets, alongside authorizing a new share repurchase plan.
Ulta Beauty shares fell on Wednesday, as the company stuck by its current forecast and shared its longer-term financial targets. The beauty retailer's CEO Dave Kimbell said the company is facing stiffer competition and a more dynamic consumer backdrop.
Ulta Beauty Inc. announced a new $3 billion share buyback authorization on Wednesday and said it plans to open 200 new stores over the next three years.
Ulta Beauty (ULTA) closed at $369.32 in the latest trading session, marking a -0.34% move from the prior day.
I'm initiating Ulta Beauty at a buy rating with a $448 price target, or ~25% upside from current levels. The stock is down more than 25% this year on self-inflicted problems, including an ERP mess that has been since resolved and an ongoing price war between retailers. Still, the company's renewed focus on its e-commerce channel and social media marketing, plus recent acceleration in online sales, can help get Ulta back on the right path.
Given its better prospects, we believe that L'Oréal stock (OTCMKTS: LRLCY) is a better pick than its peer Ulta Beauty stock (NASDAQ: ULTA). LRLCY stock trades at a higher valuation multiple of 5.2x trailing revenues, versus 1.6x for ULTA stock.
ULTA faces several challenges as shifting consumer preferences and rising competition reshape the beauty industry.