Citi sees Ulta missing expectations and guiding lower, expects shares to underperform
Analysts at Citi lowered the price target on Ulta Beauty (NASDAQ:ULTA) by $35 to $440 per share on expectations the company will miss analyst targets when it reports this week.
As a result, they have opened a 30-day negative catalyst watch on ULTA stock.
“We anticipate a slight 3Q EPS miss vs consensus ($4.92 vs cons $4.97) driven by lower GM (-190bps vs cons -140bps) due to the impact of lapping favorable pricing dynamics LY and higher shrink/promos,” the analysts said in an EPS preview note.
Moreover, Citi sees Ulta cutting full-year outlook as the management takes “a more cautious view of the holiday season given slowing category trends, higher promos/ongoing shrink headwinds.”
“As we look to F24, we believe these challenges will continue and with the macro environment uncertain, we are taking a more cautious view. Our F24E of $25.30 is below cons $26.83 based on lower sales/GM. We believe there is risk that shrink could be impacting ULTA beyond just the fragrance category, making it a more structural challenge into F24,” the analysts added.
Citi rates Ulta stock as Neutral as risk-reward at these levels is “more balanced.”
Ulta stock is down 0.2% in pre-open Monday.
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