Nomura Boosts Ulta Salon Price Target To $244, Says 15% Comp Lies On Another Plane

Shares of Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA) soared 11 percent and touched a new 52-week high after reporting better-than-expected first-quarter results and raised its full-year outlook.

Quarterly Results

The company earned $1.45 per share on $1.07 billion in revenue. Analysts had expected earnings of $1.29 a share on revenues of $1.03 billion.

Comparable store sales rose 15.2 percent versus an increase of 11.4 percent in the first quarter of fiscal 2015. The 15.2 percent same store sales increase was driven by 11 percent growth in traffic and 4.2 percent growth in average ticket.

Retail comparable sales increased 13.9 percent and e-commerce sales grew 38.8 percent to $61.0 million.

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"In an envt where modestly positive comps are hailed, 15 percent lies on another plane," Nomura analyst Simeon Siegel wrote in a note.

Siegel, who has a Buy rating on the stock, said, "ULTA continues to gain awareness and share in a growing pie, amid a category that has been generally ecomm defensible with a tight control on distribution."

"Comps and GMs posted meaningful upside, which we expect will persist and although valuation is clearly the pushback, it has been so for the past $100 of share price," Siegel added.

Expectations And Justification

For the second quarter of fiscal 2016, the company currently expects net sales in the range of $1,041 million to $1.058 billion. Comparable sales for the second quarter of 2016, including e-commerce sales, are expected to increase 11 to 13 percent. EPS is estimated to be in the range of $1.32 to $1.37.

The company also raised its fiscal 2016 sales and earnings per share guidance. The company plans to achieve comparable sales growth of approximately 10 to 12 percent versus previous guidance of 8 to 10 percent. It sees total sales to rise in the high teens percentage range, compared to prior estimate of mid to high teens percentage range.

The company expects fiscal 2016 EPS growth in the low twenties percentage range, higher than previous guidance of 18 to 20 percent. The analyst raised FY16 EPS view to $6.19 from $5.98 and FY17 EPS estimate to $7.63 from $7.16.

Siegel also increased price target on the stock to $244 from $215.

The stock touched a new 52-week high of $237.53 and at time of writing is up 8.38 percent to $231.59.