Ulta Beauty’s Stock (NASDAQ: ULTA) Staging Recovery Into Earnings – What To Expect

Ulta Beauty (NASDAQ: ULTA) heads into its highly anticipated first quarter fiscal 2025 earnings announcement after today's closing bell. Ulta's stock price has rebounded sharply in recent months, performing somewhat of a V shaped recovery off March's low.

The stock fell sharply in the first three months of the year, declining more than 25% in setting new 52 week lows. Then, the turnaround, with a rally of more than 33% into today. Such has been the flip flopping nature of sentiment, that ULTA continues to trade down on the year by 2.55% as a period of consolidation ensues.

An element of broader market sentiment, combined with renewed confidence in the company’s leadership and operational strategy has helped boost the company in recent months. However, as Wall Street braces for the latest financial results, both bullish optimism and cautionary notes are evident.

The upcoming Q1 2025 earnings report could be a pivotal event for Ulta. Wall Street consensus estimates project comparable store sales growth of just 0.2% year-over-year, with net sales forecast at $2.79 billion (up from $2.73 billion a year ago). However, analysts expect net profit to decline to $267.3 million from $313.1 million last year, and earnings per share (EPS) are anticipated at $5.8, a drop from the $6.47 posted last year.

This anticipated margin compression is a key concern for some analysts, who note that while revenue growth remains steady, rising costs and competitive pressures could weigh on profitability. Ulta’s ability to manage these pressures, while continuing to invest in digital initiatives and store expansion (with plans to grow the store base by 4% this year), will be closely scrutinized by investors during the earnings call.

Market Sentiment: Balancing Optimism and Caution

Oppenheimer recently reiterated its “buy” rating on Ulta, citing effective execution of digital priorities and improved competitive positioning against industry giants like Amazon and Walmart. The firm also highlighted the importance of Steelman’s strategic vision, even as it acknowledged that certain AI-focused stocks may offer higher near-term returns with lower downside risk.

While the overall tone around Ulta is optimistic, not all analysts are fully convinced. Concerns about margin development and intensifying competition in the beauty retail space have led some to adopt a more neutral stance. The company’s ongoing share buyback program and store expansion efforts are seen as positives, but the ability to maintain profitability will be a key focus in the quarters ahead.

Citi raised the firm's price target on Ulta Beauty from $365 to $425 with a “Neutral” rating on the shares in anticipation of the Q1 report. JP Morgan is also following suit by raising their price target on ULTA. JPMorgan have raised the firms price target from $475 to $477 and maintain an “Overweight” rating.

While the recent rally and positive technicals suggest confidence in Ulta’s direction, the company must demonstrate that it can navigate industry headwinds and sustain its momentum in an increasingly competitive landscape.