Shares of cosmetics retailer Ulta Beauty (NASDAQ:ULTA) saw a notable increase of up to 2.9%, reaching $386.17, following an upgrade from brokerage Citi.
The firm raised its price target for Ulta Beauty to $390 from $345, anticipating a strong Q3 earnings performance.
Citi analysts forecast a Q3 earnings per share (EPS) beat, driven by stronger comparable sales and a slightly improved gross margin.
However, they acknowledged challenges, noting that Ulta Beauty is facing headwinds from weakening category trends and heightened competition, which have made it difficult to drive traffic this year.
Despite these challenges, Citi expects Ulta to narrow its current annual EPS forecast.
The brokerage believes the low end of the company’s current guidance, which assumes a significant deterioration in comparable sales trends, is unlikely, particularly in the second half of the year.
Out of 31 brokerages covering the stock, 13 rate it "buy" or higher, while 16 maintain a "hold" rating, and 2 have a "sell" recommendation.
The median price target for the stock remains at $400.