Ulta Beauty: Investor Event Highlights Opportunity but Targets Underwhelm; Shares Fairly Valued

We attended Ulta Beauty’s first investor day in three years and visited its new fulfillment center in suburban Chicago. We were impressed by Ulta’s store, marketing, merchandising, and expansion plans and believe that it has growth opportunities in the beauty and wellness markets. However, its outlook for 2025 and long-term financial targets were disappointing relative to our assumptions and guidance provided at the 2021 event. Specifically, Ulta targeted long-term annual sales growth and operating margins of 4%-6% and 12%, respectively, versus goals of 5%-7% and 13%-14% from 2021. Consequently, we have lowered our projections, and our fair value estimate declines to $360 per share from $390. We rate Ulta’s shares as fully valued.