Oppenheimer expects Ulta Beauty (NASDAQ:ULTA) to report a strong top-line delivery but sees the company posting more subdued bottom-line growth when it releases earnings for its latest quarter on May 25.
The analysts, who have an Outperform rating and a $575 price target on the stock, told investors that they now see possible bumps in the Ulta Beauty bull case.
"In contrast to prior quarters, we see limited EPS upside potential amidst an aggressive investment agenda, a slightly more promotional beauty backdrop, and a weakening retail discretionary landscape," said the analysts.
"On the guidance front, we expect management to 'only' reiterate full-year guidance vs. flowing through any potential beat amidst ongoing macro uncertainty and the conservative nature of the management team."
The analysts explained that in recent quarters, ULTA shares have generally declined on the print, even with substantial beats. The stock has decreased following seven out of the past ten reports, said the analysts.
Even so, Oppenheimer "would be positioned to take advantage of any weakness on the print vs. playing for a positive catalyst," as ULTA remains a top pick for the firm.