Ulta Beauty's (ULTA) stock "likely has more room to run" after its performance in Q2, UBS Securities said in a Thursday note.

The company's comparable sales grew 6.7%, exceeding the market's consensus expectation, driven by an increase in the number of transactions and average amount spent per transaction, UBS analysts said. Most of the improvement was due to better execution and more variety of new products, as well as other initiatives, they said.

The analysts said they believe all of the positive factors in Q2 will continue to drive Ulta's business in H2. Further, by increasing its H2 sales and earnings guidance only "very slightly," the company should be able to sustain a "beat-and-raise" pattern in the next few quarters and continue the trend of positive EPS revisions, they said.

Moving into 2026, Ulta's growth should benefit from the full rollout of its third-party marketplace, more time with its "replenish and save" subscription program, and other top-line factors, UBS said. The analysts added that they expect the company to settle into an algorithm of 5% to 6% revenue growth and double-digit EPS growth.

With the company's consistent "strong performance" and conservative guidance setting, the analysts said they expect the market to reward it with a premium multiple on its stock price.

UBS maintained the company's stock rating at buy and raised the price target to $680 from $640.

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