Wait for ULTA to consolidate after earnings, and at that point it will be a solid long-term Buy
Ulta Beauty$Ulta Beauty(ULTA.US)$, the largest beauty retailer in the U.S, is expected to return to low single-digit growth after experiencing significant demand during 2021/2022. While the company continues to make strategic investments, it's anticipated that these will impact margins soon. Ulta posted 1Q EPS of $6.88, beating consensus estimates.
However, the company lowered its fiscal year 2023 operating margin guidance due to increased promotional activity. Despite this, Ulta showed resilience, particularly in the mass market brands, supported by social media engagement and new product introductions. Future prospects are balanced, with potential upsides from continued strength in the beauty category and potential downsides from a pullback in consumer demand and margin pressure from increased promotions. After this pullback in share price, we find Ulta attractive.
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