Ulta Beauty, Inc. (ULTA): A Bull Case Theory

 We came across a bullish thesis on Ulta Beauty, Inc. on X.com by wallstengine. In this article, we will summarize the bulls’ thesis on ULTA. Ulta Beauty, Inc.'s share was trading at $546.75 as of September 30th. ULTA’s trailing and forward P/E were 21.19 and 23.09 respectively according to Yahoo Finance.

Barclays has upgraded Ulta Beauty (ULTA) from Equal Weight to Overweight, raising its price target to $589 from $518, reflecting growing confidence in the company’s strategic direction under CEO Kecia Steelman, who took the helm in January 2025. Since her appointment, Ulta has implemented a series of rapid and decisive changes that have driven a return to sustainable positive comparable sales and margin expansion, signaling operational improvement across the business. Sequential quarter-over-quarter channel checks indicate a normalization in promotional activity, further supporting a stabilizing earnings trajectory.

The company is also optimizing its retail footprint by slowing the growth of its own-brand stores and planning not to renew the ULTA x Target partnership in August 2026, focusing on higher-margin, strategically positioned locations. Compared with peers, Ulta benefits from relatively low tariff exposure, particularly for goods sourced from Southeast Asia, which reduces cost volatility. Barclays highlights that FY25 guidance is initially conservative, leaving room for potential “beat and raise” quarters throughout the year, which could further drive upside.

Additionally, the broader beauty market, which peaked in 2022, appears to be stabilizing, now growing at a mid-single-digit annual rate, providing a supportive macro backdrop for Ulta’s growth. Overall, the combination of operational improvements, strategic retail optimization, resilient margins, and a recovering beauty industry creates a compelling investment case, suggesting significant upside potential for shareholders while reducing downside risk.

Previously we covered a bullish thesis on Ulta Beauty, Inc. (ULTA) by @wallstengine in May 2025, which highlighted accelerating comp momentum, improving consumer engagement, and conservative FY25 guidance creating upside potential. The company's stock price has appreciated approximately by 34% since our coverage. The thesis still stands as ULTA’s fundamentals continue to improve. Wallstengine shares a similar perspective but emphasizes CEO Steelman’s strategic retail optimization and margin expansion.

Ulta Beauty, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held ULTA at the end of the second quarter which was 42 in the previous quarter. While we acknowledge the potential of ULTA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.