Analyst Explains Why They Ulta Salon Downgrade Their Ulta Salon Rating

By Ryan Adsit

Oppenheimer analyst Rupesh Parikh downgraded Ulta Salon (NASDAQ: ULTA) to Hold today and set a price target of $270. The company’s shares closed on Friday at $248.60.

Parikh said:

“We are downgrading shares of ULTA to Perform from Outperform. Following a significant sell-off, ULTA shares are now down 2% YTD vs. a 10% gain in the S&P 500. We initially attributed much of the weakness to beauty discounting concerns and more recently AMZN worries. Last Friday, as we reviewed L’Oreal’s conference call, company commentary pointed to potentially softer trends in the US beauty market. If our read of L’Oreal’s assessment is accurate, this, coupled with increased department store discounting, could suggest a less robust US beauty market.”

According to TipRanks.com, Parikh is a 5-star analyst with an average return of 15.1% and a 58.5% success rate. Parikh covers the Services sector, focusing on stocks such as United Natural Foods, Life Time Fitness, and Bob Evans Farms.

Currently, the analyst consensus on Ulta Salon is Moderate Buy and the average price target is $319.50, representing a 28.5% upside.

In a report issued on July 26, Stifel Nicolaus also reiterated a Hold rating on the stock with a $325 price target.

The company has a one year high of $314.86 and a one year low of $225.13. Currently, Ulta Salon has an average volume of 941.6K.

Based on the recent corporate insider activity of 46 insiders, corporate insider sentiment is negative on the stock.

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Ulta Beauty, Inc. is a beauty retailer of cosmetics, fragrance, skin care products, hair care products, and salon services. It engages its products and services in retail stores, salon services, and e-commerce. The company was founded in January 9, 1990 and its headquartered in Bolingbrook, IL.