Ulta Beauty's (ULTA) recently launched TikTok Shop is expected to drive new guest acquisition for the company and help build emerging brands, Oppenheimer said in a research note on Monday.

After attending an Ulta analyst event and Ulta Beauty World, Oppenheimer said the company's management sees a significant opportunity in the wellness category.

Ulta has already expanded its wellness assortment to more than 400 stores and is also growing through the marketplace, while working to develop a differentiated guest experience with a unique assortment, Oppenheimer said.

Oppenheimer also said it was increasingly confident in the company's efforts to keep selling, general, and administrative expense growth below or in line with sales, though Ulta will still make additional investments to drive top-line growth profitably if needed.

The brokerage said it remains upbeat on Ulta Beauty's longer-term prospects and bullish on Chief Executive Officer Kecia Steelman's leadership and strategic efforts to drive additional market share gains over time.

Oppenheimer maintained its outperform rating on the stock and its $650 price target.

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