Ulta Beauty's (ULTA) updated 2026 guidance is being driven by strong execution, sustained market share gains, and better traction from new products, UBS said in a Thursday research note.

The management continues to embed appropriate conservatism as H2 comparisons are expected to be more difficult, UBS said, adding that the new guidance supports the view that Ulta Beauty's performance is being driven by company-specific factors rather than a broad recovery in beauty industry.

For the full year, Ulta Beauty now expects comparable sales growth of 3.2% to 3.7% versus 2.5% to 3.5% previously, net sales growth is slated to be between 6.7% to 7.2% compared with prior estimate of 6% to 7%. Meanwhile, EPS is expected to be $28.70 to $29.00, compared with $28.36 to $28.80 earlier.

The company's H2 pipeline will see new brand launches and exclusive product introductions from existing partners, which should support traffic, engagement, and category mix, as the midpoint of the company's comparable sales guidance implies about 2.5% growth in H2, below H1's 4.6% growth, UBS said.

The firm further said it expects most of H2 profitability pressure to be concentrated in Q3, with the quarter facing difficult comparisons as the prior-year period benefitted from pricing-related actions.

UBS lowered its price target to $710 from $735 and maintained its buy rating.

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