Bank of America analyst Lorraine Hutchinson upgraded Ulta Beauty stock to Buy with a $685 price target, viewing the recent pullback as an opportunity. The firm believes conservative fiscal 2026 guidance has reset expectations, making Ulta a more attractive investment. Hutchinson emphasizes that Ulta is investing to enhance earnings power, creating a growth-driven strategy. The company reported strong Q4 FY2026 results, with earnings per share exceeding expectations and revenue growth of 12% year over year, positioning it for sustainable growth in the future.
"Hutchinson's thesis hinges on a simple idea: Ulta Beauty is investing to compound earnings power over time. The pullback has 'brought elevated investor expectations down to earth' and creates an 'opportunity to invest in a high quality compounder at a discount to peers.'"
"Her recent channel work gives more confidence that Ulta Beauty is using investments to 'build a flywheel to drive growth instead of just running on a treadmill to keep up.' That distinction matters because Ulta Beauty's selling, general, and administrative (SG&A) expenses rose to 26% of sales from 23% last quarter."
"Ulta Beauty is the largest U.S. specialty beauty retailer, blending mass and prestige under one roof with a deep loyalty program and the recently acquired U.K.-based Space NK."
"CEO Kecia Steelman stated that Ulta Beauty is 'well positioned for sustainable, profitable growth in 2026 and beyond.'"
Read at 24/7 Wall St.
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