Ulta Beauty (ULTA) Stock Forecast & Price Target

Ulta Beauty experienced a robust net sales increase of approximately 12.9%, driven by market share gains in prestige skincare, fragrances, and makeup, alongside a significant contribution from 35 new brand launches and the full integration of Space NK. The company reported a comparable sales growth of 6.3%, outperforming expectations, and achieved a gross margin expansion of 70 basis points year-over-year, reflecting improvements in shrink, merchandise margins, and other revenue streams. Year-to-date, Ulta Beauty's shares have risen by 38%, significantly outperforming the broader S&P 500 and XRT ETF, underscoring the effectiveness of its strategic initiatives in a competitive market.

Ulta Beauty's Q3 earnings per share (EPS) remained flat at $5.14 compared to the previous year, highlighting potential stagnation in operational performance. Key risks include deterioration in the macroeconomic environment, increased competition from e-commerce platforms, and the company’s dependency on a limited number of vendors that account for half of its net sales, which raises concerns about supply chain stability. Additionally, the impending loss of royalty revenue from the Target partnership in 2026, combined with potential labor-related cost increases and difficulties in new store performance, further amplifies the negative outlook on the company's financial prospects.