Key Points
- Ulta Beauty insiders were selling, but now they aren't, and share prices are trending higher.
- Insides and institutions also support the stock and could push it to a new all-time high.
- Q4 results and 2023 guidance could be the catalyst to get this market moving.
Ulta Beauty's (NASDAQ: ULTA) insider trading activity can be telling for the lack of activity as much for sales or purchases. Insiders were selling in 2021 and 2022, but those sales trickled to nothing and halted in Q3 of 2022. Since then, shares of the stock have seen a meteoric rise in share prices that have the stock up more than 35% in less than a year.
A quick look at the results will tell you why. Mall stock or not, this company is seeing sustained growth despite the pullback in pandemic-stimulus spending and the outlook for more of the same this year and next. In this scenario, given the trend of outperformance, this stock could continue rising through the end of the year.
Institutions And Analysts Drive Ulta Beuty Higher
Institutional and analyst activity is helping to drive Ulta Beauty stock prices higher. On the institutional front, the institutions have been accumulating shares in this stock for 11 of the last 13 consecutive quarters.
The two quarters they did not accumulate are marked by relatively vigorous action that was more even than not. That aside, institutional activity has picked up the last 2 quarters and netted about $1.7 billion worth of shares, or about 6% of the market cap, with shares trading near all-time high levels.
There are at least 20 analysts with current reports on Ulta Beauty, and they are bullish on the stock. The consensus rating is a Moderate Buy but firmed from a slightly weaker Moderate Buy last year with a price target of $527. The $527 price target assumes the stock is fairly valued at the current level but has been trending higher all year. Assuming this trend continues, Ulta Beauty may be moving up to that high fairly soon.
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The latest shout-out comes from Telsy Advisory Group, which has the stock pegged at Outperform with a price target 10% above the consensus target. UBS, which also issued some recent commentary, has Ulta on its list of stocks “derisked from earnings.”
The next major catalyst will be the FQ4 2022 earnings results, which are due soon. The analysts expect revenue growth of 9% and earnings growth of only 3% due to the omnipresent inflation driving the FOMC to act so hawkishly. The company tends to outperform on both the top and bottom lines, which is already expected.
The questions are if it will outperform robustly or not so much and how the margins have been impacted. Guidance will also be a driving factor; the company raised guidance in the last two reports and will need to provide more to keep the market moving higher.
Mall Stocks Not So Hot
Other mall stocks are rebounding from corrections, and Macy’s (NYSE: M) is in the lead. Macy’s is notable for guiding the market lower, warning that Q4 results would be weaker than previously expected. This set the bar very low and now, with revenue, earnings, and guidance above consensus, share prices are popping. The Gap, Inc (NYSE: GPS) is another to have the radar as it displays brand strength and resiliency in harsh retail operating conditions.
Turning to the chart, Ulta Beauty is in an uptrend, and that uptrend is accelerating. The recent action has it bouncing from the 150-day moving average and rocketing higher to retest the all-time high. Assuming Q$ results are acceptable, this stock could extend the rally by another $50 or more by the summer.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Macy's (M) | $15.08 | -1.7% | 4.58% | 23.56 | Hold | $20.43 |
| GAP (GPS) | $0.00 | -100.0% | ∞ | 13.64 | Moderate Buy | $27.08 |
| Ulta Beauty (ULTA) | $379.79 | -0.2% | N/A | 15.24 | Hold | $420.71 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
