Prime Highlights-
- Jefferies has upgraded Ulta Beauty to Buy, citing stronger makeup demand, better merchandising, and improved cost control.
- The brokerage set a $700 price target, showing increased confidence in the company’s future performance.
Key Facts-
- Makeup accounts for nearly 38% of Ulta’s total sales, with rising demand for products like blush and concealer.
- Ulta is improving its product mix by adding more new and trend-based brands instead of relying mainly on older brands.
Background-
Ulta Beauty Inc. has received a positive push after brokerage firm Jefferies upgraded the stock to Buy, citing stronger makeup demand, improved store merchandising, and better control over costs. The firm also set a price target of $700, showing higher confidence in the company’s future growth.
Jefferies said Ulta’s risk and reward outlook has improved after a period of weak investor sentiment. It valued the stock at about 22 times earnings and noted that earlier concerns about the company have eased.
A major reason for the upgrade is a recovery in the makeup category, which makes up nearly 38% of Ulta’s sales. The brokerage said customer interest is rising in products like blush and concealer, supported by stronger online search activity and better brand engagement.
The report also pointed to early signs of a wider recovery in the beauty industry. It noted that beauty demand usually moves in long cycles, and the current growth trend could continue beyond fiscal 2026 if momentum holds.
Jefferies said Ulta has improved its product selection under recent leadership changes. The company is adding more new and trend-based brands instead of relying mainly on older brands that are widely available elsewhere.
The firm described Ulta as an “index fund of beauty,” saying it offers a wide mix of products from low-cost to premium brands, which is a major strength. This helps the retailer serve both budget and premium shoppers.
It also said better cost control and possible profit margin gains could support more stable earnings in the future. Recent changes in product strategy are also helping Ulta compete better in the market.
Overall, Jefferies said stronger demand, better execution, and improved strategy support a more positive outlook for Ulta Beauty’s performance ahead.
