Ulta Beauty’s Explosive Start to the Year Has Stalled. Here’s Why.

Main Points

• Ulta Beauty's stock experienced a sharp decline on Friday, wiping out its gains for the year after the company's quarterly earnings and future projections fell short of expectations.
• Following the disappointing results, analysts at Morgan Stanley, JPMorgan, and Oppenheimer lowered their price targets for Ulta's shares.

Ulta Beauty began the year with strong momentum, but that trend reversed this week.

Ulta's shares (ULTA) dropped nearly 11% to around $557 in recent trading, following a quarterly report that failed to meet profit and outlook expectations. This made Ulta the worst performer in the S&P 500 on Friday, erasing its gains for the year so far.

For the fourth quarter, Ulta reported earnings per share of $8.01, which was two cents below analyst estimates from Visible Alpha. However, revenue came in at $3.9 billion, surpassing forecasts.

Looking forward, Ulta projects comparable store sales growth between 2.5% and 3.5%, and expects earnings per share for 2026 to fall between $28.05 and $28.55. Both figures are below what analysts had anticipated.

Investor Implications

Ulta's stock had been climbing in recent months thanks to steady demand for beauty and personal care products. However, the significant drop on Friday indicates that the weaker outlook has shaken investor confidence.

Oppenheimer analysts reduced their price target for Ulta from $750 to $650, citing concerns over the company's cautious guidance and the potential impact of economic and geopolitical uncertainties on sales.

JPMorgan and Morgan Stanley also lowered their targets to $750 and $700, respectively. Despite these adjustments, both firms still see potential for the stock to rise, driven by expectations for continued growth in the beauty sector and Ulta's expanding market presence.

Friday's sell-off pushed Ulta's shares, which had reached a new all-time high just last month, into negative territory for the year. Nevertheless, the stock remains more than 50% higher than it was at this time last year.