Weight Watchers, Ulta Beauty Stocks Get More Analyst Love

Ulta Beauty analysts are bullish, but options traders have preferred puts

May 15, 2018 at 10:06 AM
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Scanning the analyst attention across Wall Street this morning, two names that stood out were Weight Watchers International, Inc. (NYSE:WTW) and Ulta Beauty Inc (NASDAQ:ULTA). The healthy eating specialist and the cosmetics retailer could both be aiming for fresh highs soon, based on recent analyst coverage. We'll take a closer look at shares of WTW and ULTA below.

Analysts Keep Eating Up Weight Watchers

Weight Watchers stock has been a revelation for bulls. Looking back to December 2016, the equity was trading below $12, but it's since surged to today's price of $79.21. Earlier today, in fact, WTW touched a six-year high of $81.93. SunTrust Robinson is expecting more upside going forward, this morning initiating coverage on the security with a "buy" rating and $90 price target, a 14.2% premium to the current price.

On a closer look, SunTrust Robinson's huge expectations aren't uncommon. The average 12-month price target from those covering Weight Watchers actually stands all the way up at $102.25, a level that prices in upside of almost 30%. There are certainly skeptics out there, however, considering almost 21% of the stock's total float is held by short sellers.

ULTA Stock Trades Above Key Area

Ulta Beauty has also been a favorite of analysts, evidenced by a number of bull notes in 2018 alone. Oppenheimer was the latest to weigh in, this morning upgrading its opinion on ULTA shares to "outperform" from "perform," with the covering analyst expecting the company to benefit from a number of strong trends and deliver near the top-end of their guidance when its reports earnings on May 31.

But while the vast majority of analysts tracking the security have the equivalent of a "buy" rating in place, the average 12-month price target stands at just $255.23, offering virtually no upside from current levels. At last check, the shares were trading up 1% at $249.57, putting them just above the site of a double-top formation from January.

Options traders have been bearish, though. For example, the equity's 10-day put/call volume ratio from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.33, and ranks in the 92nd annual percentile. This means put buying has been much stronger than normal, compared to call buying.

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