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Analysts At Baird Expect Strong Q2 From Ulta Salon

Ulta Salon, Cosmetics & Fragrance, Inc. NASDAQ:ULTA - Analysts At Baird Expect Strong Q2 From Ulta Salon

As Ulta Salon, Cosmetics & Fragrance, Inc. ULTA 0.69% is scheduled to release its financial results for the second quarter on August 25, Baird analysts Mark Altschwager and Drew North expect strong results. The brokerage reiterated its Outperform rating and boosted the price objective from $280 to $300.

In the last four quarters, the company's EPS topped estimates between 2.7 percent and 12.4 percent. Currently, the Street expects an EPS of $1.40 on revenue of $1.06 billion for the second quarter.


The lead analyst expects the company to report a minimum of in-line results for the second quarter. The confidence stems from the company's solid execution, supported by tailwinds in the category like specialty channel taking share and momentum on beauty category apart from traffic-driven initiatives. He is also confident of the company delivering e-commerce growth.

Baird said in its research note, "Comp guidance (+11–13 percent; vs. +12.5 percent/+12.9 percent estimate/consensus) incorporates sequential deceleration from Q1 (reported +15.2 percent comp). We wouldn't rule out upside to consensus given the multitude of powerful top-line drivers fueling recent performance. However, to the extent the optics of comps decelerating to 'only' ~13 percent results in a pullback, we would be buyers."

The brokerage does not see the stock as inexpensive, as the shares traded at a premium of 16 percent compared to its peers, but slightly more than its LTM average of 11 percent. However, the lead analyst believes that the premium valuation is justified in the case of Ulta.

At time of writing, Ulta was trading at $274.82, down 0.39 percent on the day.

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Aug 2016BairdMaintainsOutperform
Aug 2016Piper JaffrayMaintainsOverweight
May 2016JP MorganMaintainsOverweight

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