Ulta Beauty Earnings: Alluring Results but Guidance Looks Rather Plain; Shares Overvalued

Narrow-moat Ulta Beauty beat our expectations in 2023’s fourth quarter (ended January 2024), but its shares retreated 7% in aftermarket trading on March 14. We think investors may have been disappointed by Ulta's subdued 2024 outlook, although it aligned with our forecast. Moreover, shares had reached an all-time high after rising 16% since the beginning of January. Although we expect to raise our $387 fair value estimate by a mid-single-digit percentage due to the strong 2023 performance, we rate the shares as overvalued.