UBS Sees Upside for Ulta Beauty as Market Pressures Ease

UBS maintained its Buy rating and $490 price target on Ulta Beauty (NASDAQ:ULTA), citing signs of stabilization in the retailer’s market position and improved conditions across several key areas.

Analysts pointed to recent data suggesting that Ulta’s market share has leveled off, indicating a potential end to the sales drag caused by the Sephora rollout at Kohl’s, which now appears to have been more disruptive than previously estimated. With that cannibalization likely peaking, UBS believes Ulta is better positioned to regain sales momentum.

On the cost side, the firm expects that potential new tariffs will have minimal impact, thanks to the sourcing and manufacturing diversification of major beauty brands. Meanwhile, the beauty sector's resilience in past downturns supports the case that Ulta can continue to perform well even if the broader consumer landscape weakens.

With shares currently trading just above 15 times next-twelve-month earnings estimates, UBS sees room for multiple expansion and stock appreciation, particularly as sales headwinds subside and Ulta maintains its strong brand and category leadership.