What Happened?
Shares of beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ: ULTA) jumped 11.6% in the morning session after the company reported an impressive "beat and raise" third-quarter financial results.
The beauty retailer announced that its net sales grew by 12.9% to $2.86 billion for the quarter, with comparable sales increasing by 6.3%. Earnings came in at $5.14 per share, which was higher than analysts had predicted. Management credited the quarter’s momentum to enhanced in-store experiences, an expanding loyalty program, and a strong slate of exclusive brand launches. CEO Kecia Steelman pointed to double-digit e-commerce growth and a record 46.3 million loyalty members as key contributors, emphasizing the company’s ability to “accelerate our top-line growth, increase our market share, and drive our results.”
Following these strong results, Ulta lifted its outlook for the full year. The company now expects net sales to be around $12.3 billion and projected earnings of $25.35 per share at the midpoint. This was an increase from its previous guidance, signaling management's confidence in continued demand.
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What Is The Market Telling Us
Ulta’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Ulta and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 3.1% on the news that JP Morgan analyst Christopher Horvers maintained an "Overweight" rating on the company while raising the price target. The financial firm increased its price target on Ulta Beauty's stock to $606 from $600. An "Overweight" rating suggests that the analyst believes the stock will perform better than the overall market in the future. This vote of confidence from a major Wall Street bank signaled a positive outlook for the beauty retailer, which likely boosted investor sentiment and drove the share price higher.
Ulta is up 41.9% since the beginning of the year, and at $608.92 per share, has set a new 52-week high. Investors who bought $1,000 worth of Ulta’s shares 5 years ago would now be looking at an investment worth $2,228.
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