Ulta Beauty stock slips on Jefferies downgrade to Hold

Ulta Beauty (ULTA) stock is taking a dip as Jefferies analysts downgrade the cosmetics brand's stock to Hold from a Buy rating and cut its price target to $438 per share from $585.

Market Domination Anchors Madison Mills and Julie Hyman review the analyst commentary around Ulta.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video transcript

MADISON MILLS: I love to talk about Ulta. Jefferies downgrading its rating on that name to a hold from buy while also lowering the price target on the company to 438 from 585. The analyst on the move pointing to increased competition and an aging brand mix for the reasoning behind the downgrade. Tough use of aging when it comes to some of these names that I definitely use still. We've got Clinique, Estée Lauder, and even MAC is one of the aging makeup names.

JULIE HYMAN: Right.

MADISON MILLS: Or legacy.

JULIE HYMAN: That's the nice-- That's the prettier word that we use for that.

MADISON MILLS: Thank you.

JULIE HYMAN: It's the aging legacy.

MADISON MILLS: Thank you.

JULIE HYMAN: That's like legacy musical acts.

MADISON MILLS: Right, absolutely.

JULIE HYMAN: Like the Rolling Stones. Legacy.

MADISON MILLS: That's what we'll play in the next break, but I thought it was really interesting that they talk about some of the competition because I do this at T.J. Maxx. People are-- you know, some of these makeup brands are offering discounted items to T.J. Maxx, then the consumer can just go there instead of going to Ulta.

JULIE HYMAN: Right. Well, and they also mentioned Sephora quite a bit in here, saying that Sephora has been better at sort of carrying the more cutting-edge brands, which I guess is the opposite of legacy, right? And that that's-- And that that's where the people are looking for those sort of on-trend brands.

Now Ulta, of course, recently came out and warned and really surprised the Street. The stock dropped a lot, and there was a lot of sort of questions about what was going on there. And I think this note does a good job of getting at part of what could be going on at Ulta.

MADISON MILLS: Right, a mixed picture when it comes to-- I mean, they have such a big offering of brands, so definitely a mixed picture there.