Analysts Offer Insights on Services Companies: Ulta Salon (NASDAQ: ULTA) and Burlington Stores (NYSE: BURL)

By Austin Angelo

Analysts have been eager to weigh in on the Services sector with new ratings on Ulta Salon (NASDAQ:ULTA) and Burlington Stores (NYSE:BURL).

Ulta Salon (ULTA)

Oppenheimer analyst Rupesh Parikh maintained a Buy rating on Ulta Salon today and set a price target of $280. The company’s shares opened today at $244.41.

Parikh observed:

“We overall view the Q2 results as mixed, but view management’s conference call commentary on beauty innovation as very bullish. On the positive side, ULTA delivered upside to EPS targets against a more difficult color cosmetic backdrop and gained significant share across categories. On the negative side, comps fell short of Street expectations. With this negative data point out of the way, we believe the outlook for ULTA shares could brighten from here as innovation accelerates in the back half of the year. ULTA remains a top pick for us, and we see a very attractive 2H for shares. We would take advantage of the weakness after hours, and still see a move higher to the $280 level over the next few quarters.”

According to TipRanks.com, Parikh is a 5-star analyst with an average return of 16.3% and a 64.3% success rate. Parikh covers the Services sector, focusing on stocks such as Blue Apron Holdings Inc, United Natural Foods, and Wal-Mart Stores Inc.

Ulta Salon has an analyst consensus of Moderate Buy, with a price target consensus of $266.33, an 9.0% upside from current levels. In a report issued on August 28, Piper Jaffray also maintained a Buy rating on the stock with a $270 price target.

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Burlington Stores (BURL)

In a report released today, Robert Drbul from Guggenheim maintained a Hold rating on Burlington Stores. The company’s shares opened today at $165, close to its 52-week high of $172.65.

Drbul commented:

“We continue to favor Off-Price and believe the sector will continue to gain share in ’18, but remain NEUTRAL largely due to valuation. We also would be remiss not to mention the comp discrepancy in 2Q vs. peers 2-year basis (ROST/Marmaxx drove +9% 2-year comps vs. BURL +6.4%). Total sales for 2Q increased 9.9% to $1.5bn (vs. our +9.1% estimate), including a 2.9% comp increase (~in-line with 3.0% estimate). Growth also included $94mn from new/ non-comparable stores. The +2.9% shifted comp (13 weeks ended 8/4/18 vs. the 13 weeks ending 7/29/17) was driven primarily by increases in AUR and UPT, while conversion and traffic were up slightly (14 of last 16 quarters have had traffic increases).”

According to TipRanks.com, Drbul is a top 100 analyst with an average return of 18.4% and a 80.5% success rate. Drbul covers the Services sector, focusing on stocks such as National Vision Holdings Inc, Lululemon Athletica Inc, and Ascena Retail Group.

Currently, the analyst consensus on Burlington Stores is a Moderate Buy with an average price target of $169.43.

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