Ulta Beauty Stock Suffers After Ugly Earnings

Ulta also lowered its full-year forecast

Digital Content Manager
Aug 30, 2019 at 10:21 AM
facebook X logo linkedin


Makeup retailer Ulta Beauty Inc (NASDAQ:ULTA) has taken a nosedive today, after the firm reported second-quarter earnings and revenue below analysts' estimates. The firm also slashed it full-year same-store sales and profit forecast, citing ebbing demand for the cosmetics market. ULTA stock, at last check, is down 24.9% at $254 -- on course for its biggest one-day loss on record. 

The plummet has the equity trading back near its January lows, and just atop its year-to-date breakeven. After hitting an all-time high of $368.83 in late July, the security pulled back to test its footing atop the $320 level -- home to its 200-day moving average. Today, however, ULTA stock is set to breach this trendline for the first time in eight months.

The dramatic dip has analysts running in with bear notes. Morgan Stanley downgraded the shares to "equal weight," and more could be on the horizon, considering the 13 "buy" or better ratings on the table, compared to only four "holds." So far, at least 11 analysts have slashed their price targets on ULTA, including Stifel, which cut its target to a Street low of $250.

Short sellers are likely cheering today's dismal earnings reaction, though ULTA is on the short-sale restricted list. These pessimistic positions surged roughly 20% in the last reporting period. The 3.37 million shares sold short represent 6% of the stock's available float. 

Options bulls, on the other hand, could be in for a shock, with ULTA sporting a 10-day call/put volume ratio of 1.5 on the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 85th percentile of its annual range, too, suggesting an uptick in bullish bets ahead of ULTA's earnings report.

However, one point of potential consolation for ULTA longs: the stock tends to shine in September. In fact, Ulta Beauty has been the best S&P 500 stock to own in the month of September, looking back 10 years. More specifically, the stock has gained 13.2%, on average, and has ended higher 90% of the time, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI