Ulta Beauty's (ULTA) risk-reward profile is skewed to the upside, with a "compelling path ahead" for its shares, UBS said in a Wednesday note.

UBS analysts said that the company's market share looks to be stabilizing, despite the recent slowdown in the beauty category. Data from Numerator showed that the year-over-year declines in the company's share position have diminished over the last several months, they said.

Further, the analysts said that Ulta should see less of an impact from tariffs compared to other retailers, citing the company's low direct exposure and diverse sourcing footprint.

Ulta's loyalty program will prove to be a key differentiator from peers and should drive customers to consolidate spending at the retailer, the analysts added, noting that 95% of the company's sales are from loyalty members and that its membership base grew to 44.6 million.

UBS maintained the company's stock rating at buy and the price target at $490.

Price: 382.17, Change: +8.26, Percent Change: +2.21