On Friday, BMO Capital Markets maintained a Market Perform rating on ULTA Salon (NASDAQ: ULTA) and increased its price target to $540 from the previous $485. The adjustment follows ULTA's announcement of earnings that surpassed expectations on both revenue and profit margins. ULTA also revealed plans for expansion and a share repurchase program.
ULTA Salon reported earnings that beat analysts' predictions, with improvements in gross margin and selling, general, and administrative expenses (SGA). The company provided earnings per share (EPS) guidance slightly below the consensus at the high end, marking the first time in three years, and revenue forecasts marginally above the consensus at the low end.
In addition to the financial results, ULTA Salon announced a strategic move to expand its operations into Mexico by 2025 through a joint venture. This international growth initiative is part of the company's broader strategy. Furthermore, ULTA Salon declared a $2 billion share repurchase program, demonstrating confidence in its financial strength and commitment to delivering value to shareholders.
BMO Capital Markets recognized ULTA Salon's consistent performance, noting that the stock price generally reflects the company's solid execution. The new price target of $540 is based on approximately 18 times the fiscal year 2025 estimated earnings per share, as indicated by the firm.
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