Analysts are placing bets on Ulta Beauty , expecting that the stock has further room to run as the company shows continued signs of strength despite a weakening macro picture. The beauty company on Thursday reported results for the prior quarter that beat analysts’ expectations on the top and bottom lines. Ulta also raised its full-year guidance. Amid the news, William Blair’s Dylan Carden reinstated coverage of the stock with an outperform rating, saying in a note to clients that the company retains a resilient business model and solid long-term growth potential. “We believe that Ulta is well positioned to continue to take meaningful market share over time and that the cosmetics category is poised for a continued rebound as the pandemic subsides and greater newness is introduced,” Carden said. Even as consumer spending as recession fears mount and rising inflation takes its toll, customers are staying loyal to Ulta and its slew of products, analysts say. “All key beauty categories demonstrated strength with DD growth for the second quarter in a row,” wrote Deutsche Bank analyst Krisztina Katai in a note to clients Thursday. “Encouragingly, ULTA’s business remains resilient with no sign of consumer trade down, despite vendor price increases that contributed ~300 bps to comp growth.” While Ulta Beauty’s consumers may lean toward higher income, JPMorgan Chase’s Christopher Horvers said in a note to clients Friday that the brand is showing continued strength across all income groups. Horvers also expects further price hikes from the company’s vendors this year to lift comps, which rose 14.4% — ahead of Wall Street’s expectations. E-commerce sales also showed signs of continued strength. JPMorgan retained its $510 price target on the stock, meaning shares could rally about 22% from Thursday’s close. The stock is up 1.7% this year. — CNBC’s Michael Bloom contributed reporting
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