Narrow-Moat Ulta’s Momentum Continued in a Beautiful Q3; Valuation Is Unattractive

Fine execution and the ongoing surge in demand for beauty as the economy reopens powered Ulta’s sales and margin outperformance in 2021’s third quarter. Moreover, we think the holiday outlook is bright as its guidance suggests fourth-quarter comparable sales growth of 15%-20% versus our 15% forecast. Thus, we intend to lift our per share fair value estimate of $259 by a high-single-digit percentage, although we view its shares, up 5% in post-market trading, as fully valued.