Ulta Beauty ‘s stock is looking more attractive after a pullback, especially as the retailer could be poised to reap the benefits of its recent investments, according to Bank of America. The bank upgraded the retailer to buy from neutral. It has a $685 price target on shares, suggesting 32% upside from Monday’s close.The stock was trading up nearly 3% ahead of the Tuesday’s open. “ULTA is using [its recent investments] to build a flywheel to drive growth instead of just running on a treadmill to keep up,” analyst Lorraine Hutchinson said Tuesday in a note to clients. “The pullback has brought elevated investor expectations down to earth in our view, creating an opportunity to invest in a high quality compounder at a discount to peers.” Over the past three months, Ulta stock has shed nearly 24%. Its decline accelerated after the beauty supply chain told investors in March that it had poured more than $434 million into opening new stores, remodeling existing ones, improving its information technology systems, expanding its Wellness by Ulta retail space and growing its international footprint in fiscal 2025. ULTA 3M mountain Ulta stock has shed nearly 24% over the past three months. But while some investors are concerned about Ulta’s outlook and outsized spending, the company’s investments seem poised to give its stock a big boost, Hutchinson said. “We expect these initiatives to lower the future cost to serve, improve customer economics, and open more profitable growth vectors,” she wrote. “Management is focused on growing operating income dollars and we expect it to hit its low-double-digit algorithm in [fiscal 2026] and beyond.” She added, “we see a path to multiple expansion as cleaner SG & A discipline emerges, driving operating income growth and stronger free cash flow.” Bank of America’s call falls in line with consensus on the Street. Of the 28 analysts covering Ulta, 19 have a buy or strong buy on shares, LSEG data shows.
