Ulta Stock Blasted With Bull Notes After Upbeat Earnings Report

Jefferies upgraded ULTA to "buy"

Digital Content Manager
May 27, 2022 at 9:41 AM
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The shares of Ulta Beauty Inc (NASDAQ:ULTA) are up 8.1% at $408.50 ahead of the open, following the cosmetics retailer's first quarter earnings report. Ulta posted profits of $6.30 per share on $2.35 billion, topping analysts' estimates. The company also issued a better-than-expected full-year earnings and revenue forecast, noting easing Covid-19 restrictions and strong demand for beauty products. 

No fewer than eight analysts chimed in with price-target hikes, including Jefferies, which raised its price objective to $475 from $400. The brokerage also upgraded ULTA to "buy" from "hold," adding that the beauty company's "approach to cost management is significantly more disciplined than in the past."

This puts the 12-month consensus price target at $456.43, which is a 20.8% premium to last night's close. Meanwhile, seven of the 22 in coverage considered ULTA a "hold" coming into today, which could lead to additional upgrades down the line. 

An unwinding of pessimism among options traders could also create tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ULTA sports a 50-day put/call volume ratio of 1.13, which sits in the 81st percentile of its annual range. In other words, options traders have been picking up puts at a quicker-than-usual clip. 

Short-term options traders have also been quite put-biased. This is per Ulta stock's Schaeffer's put/call open interest ratio (SOIR) of 1.19, which stands above 73% of all other annual readings. 

Ulta stock has been a relative outperformer, boasting a 15.4% year-over-year lead, and today's pop could bring it back within striking distance of its year-to-date breakeven level. The security was surging during yesterday's session as well, reclaiming support at its 320-day moving average, and already headed for its best week in roughly a year. 


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