Oppenheimer, which reiterated its Outperform rating on Ulta Beauty, expects comps and EPS to at least meet Street forecasts, and sees conservative comp and core EPS guidance for the full-year.
On average, results have topped the midpoint of initial comp guidance by about 5 percent points during the past three years.
The brokerage, which raised its price target by $15 to $315, acknowledged the valuation isn't “accommodative,” with the shares bouncing off from $230 levels and nearing $300.
“However, we still see healthy comp and earnings upside, which support continued outperformance from here and justify a premium valuation, in our view,” analyst Rupesh Parikh wrote in a note.
Parikh said the company would benefit from strong underlying beauty category growth, innovation, ongoing benefits from key company initiatives, department store rationalization, and store maturation.
“[W]e still feel confident in ULTA’s ability to deliver double-digit comp growth again in FY17. ULTA remains a top pick for us,” Parikh added.
Growth Prospects Priced In To Shares
On the other hand, Loop Capital’s Anthony Chukumba maintained his Hold rating and $285 target and expects investor focus to primarily be on comparable sales growth; prestige brand performance.
Chukumba expects fourth quarter EPS of $2.13, which is at the high end of management's guidance range of $2.08-$2.13 and in line with consensus. The analyst projects F2017 EPS of $8.11, $0.09 ahead of consensus.
Given the track record of the company, the analyst sees an upward bias to his estimates.
Meanwhile, investors will focus on the comps, especially after the 16.7 percent jump in the third quarter and management's guidance of a 13-15 percent rise in the fourth quarter.
“While we continue to believe Ulta Beauty is one of the most compelling fundamental stories in the retail industry, we think the company’s attractive near- and long-term prospects are fully reflected in its stock price at the current level,” Chukumba wrote in a note.
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Latest Ratings for ULTA
|Feb 2017||Loop Capital||Initiates Coverage On||Hold|
|Dec 2016||BMO Capital||Initiates Coverage On||Outperform|
|Aug 2016||Buckingham Research||Maintains||Buy|
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