JPMorgan sees Ulta Beauty EPS 'well ahead' of consensus

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JPMorgan sees Ulta Beauty EPS 'well ahead' of consensus
Credit: © Reuters.

By Sam Boughedda

Ulta Beauty (NASDAQ: ULTA ) is set to report its third-quarter earnings after the close on December 1, and JPMorgan raised its price target on the stock to $535 from $510 per share ahead of the release, believing the company will report earnings well above consensus.

Ulta Beauty shares are up over 2% so far on Monday.

Analysts, who maintained an Overweight rating on the stock, told investors the firm is raising its Q3 comp/EPS well ahead of consensus while it expects more prudence in the company's guidance.

"Given ongoing share of wallet shifts back to experiences, accelerating pricing, and our data analysis, we are raising our 3Q comp forecast to 13% (vs. 7% previously and the Street's 8% with the buyside similar to our forecast, per our conversations). Our updated 3Q EPS forecast of $4.66 is also well-ahead of $4.11 per Consensus Metrix," explained JPMorgan.

However, due to slower trends in the quarter-to-date, "most difficult" 2Y comparisons of the year in November, normalized holiday shopping seasonality, and a softening consumer, JPMorgan expect ULTA to only raise its FY guide to reflect the Q3 upside, whereas in both Q1 and Q2 2022, they raised for QTD.

"The company had previously guided to LSD comps in 4Q while the Street is at 4.7%, which would imply guiding below but we look at this as prudence. Indeed, recall both Nov 2020 and 2021 benefitted from re-opening into Thanksgiving celebrations/travel that was then stunted by a COVID-19 resurgence," the analysts added.

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