Ulta Reported 'Another Monster Quarter,' But Guidance Was Conservative
Ulta Beauty Inc (NASDAQ: ULTA) reported its fourth-quarter results ahead of expectations. While new investments impact the earnings outlook for FY 2017, these would likely boost “the longer term market share opportunity,” Oppenheimer’s Rupesh Parikh said in a report.
Parikh maintains an Outperform rating on the company, with a price target of $315.
Share Respond To Conservative Guidance
Ulta Beauty reported its EPS at $2.24, representing 33 percent growth and beating the consensus forecast of $2.14. Earnings were boosted by stronger-than-expected comps, which more than offset weaker-than-expected gross margins, Parikh noted.
Comps grew 16.6 percent in Q4, following a 12.5 percent increase in the prior year, and topped the consensus forecast of a 13.8 percent.
The company’s shares declined 5 percent, following the earnings release, with management announcing disappointing guidance. Ulta Beauty projected EPS growth in the low-20s percentage range, implying an EPS of $7.82–$7.95, versus Street expectations of $8.03.
Positives
Management guidance has typically been conservative team, and the implied EPS guidance for FY17 reflects mostly the impact of new investments “such as prestige boutiques/brands and new urban locations including the first store in Manhattan,” the analyst wrote.
“These investments clearly diminish our earnings outlook for FY17, but should enhance the longer term market share opportunity for ULTA down the road,” Parikh commented while recommending to “take advantage of [share price] weakness.”
Related Link:
Feb 2017 | Loop Capital | Initiates Coverage On | Hold | |
Dec 2016 | BMO Capital | Initiates Coverage On | Outperform | |
Aug 2016 | Deutsche Bank | Maintains | Hold |
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