Ulta Beauty’s Stock Hits 52-Week High Ahead of Earnings: What To Expect

Ulta Beauty's stock price (NASDAQ: ULTA) has been riding high into today's earnings print, hitting 52 week highs at $536.89 in Wednesday's session, and holding on to gains of 24.38% YTD. However, beneath the surface of this bullish trend lie some conflicting signals that investors should carefully consider ahead of the company's earnings report, due later today.

In the previous quarter, the company posted an EPS of $6.70, exceeding the consensus estimate of $5.81 by a significant $0.89. This track record of beating expectations has undoubtedly contributed to the positive sentiment surrounding the stock.

However, looking ahead, analysts are expecting EPS to come in today at $5.04, a drop on the $5.30 in the same period Y/Y, and the $6.70 in the most recent quarter. Revenue is expected to come in at $2.67B, a 4.81% sales growth rate Y/Y.

The technical indicators paint a positive picture. Ulta's 50-day simple moving average (SMA) of $489.97 and its 200-day SMA of $415.17 both point towards a sustained upward trend. This suggests that the stock's recent gains are not merely a short-term blip but rather a reflection of underlying strength.

The Bear Case: Downgraded Expectations and Partnership End

Despite the positive momentum, several factors warrant caution. Analysts have revised their earnings estimates downward, with the consensus EPS estimate for the current fiscal year now at $23.21, a decrease of 8.9% over the past 30 days. This suggests that the market's initial enthusiasm may be tempered by concerns about future profitability.

The recent announcement of the termination of Ulta's in-store mini-shop partnership with Target, set to conclude in August 2026, also casts a shadow.

While the reasons for this mutual decision remain undisclosed, the market reacted negatively, with Ulta's stock experiencing a slight dip following the announcement.

The partnership, initiated in 2021, was designed to expand Ulta's reach and attract new customers, so its termination raises questions about the company's future growth strategy.

The Bull Case: Strategic Acquisitions and Analyst Optimism

On the other hand, Ulta's acquisition of Space NK Limited, a British beauty retailer, demonstrates its commitment to global expansion. This strategic move provides Ulta with a foothold in the UK and Irish markets and aligns with its “Unleashed” plan for international growth.

Some analysts remain optimistic about Ulta's prospects. Oppenheimer recently raised its price target to $600, reflecting confidence in the company's ability to continue delivering strong results. The company has also reported third-quarter earnings that surpassed analyst expectations, with adjusted earnings per share of $5.14 and sales of $2.53 billion.

Ulta Beauty's stock is currently enjoying a wave of positive momentum, fueled by strong technical indicators, strategic acquisitions, and analyst optimism. However, there are a couple of warning signs, including downward earnings revisions, the termination of the Target partnership, and the CFO transition. A beat on earnings, coupled with positive guidance, could send the stock even higher. However, a miss could trigger a pullback, with $520, and $500 levels of support.