Ulta Beauty's (ULTA) better-than-expected sales and gross margin fueled a major earnings upside for fiscal Q3, with earnings per share of $5.14 beating the $4.53 consensus, Oppenheimer said.
The firm also said in a Thursday note that management boosting guidance for fiscal 2024 is a "clear positive surprise."
For fiscal 2024, Ulta has raised its EPS outlook to between $23.20 and $23.75, up from the previous range of between $22.60 and $23.50.
Oppenheimer said the company's latest results together with "recent challenges" at Kohl's (KSS) "should help to put to rest some bearish concerns" on Ulta Beauty.
The firm said that for 2025, Ulta Beauty and Target (TGT) continue to be its favorite rotation plays.
The brokerage remains positive on Ulta Beauty's long-term prospects, citing its unique value proposition, strong merchandising, beauty category appeal, growth potential, market share opportunities, and capable management.
Oppenheimer boosted its price target on Ulta Beauty to $505 from $435 and maintained its outperform rating.
Shares of Ulta Beauty advanced 10% in recent trading.
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