ULTA (ULTA) Shares are Undervalued - Cowen

Cowen analyst, Oliver Chen, believes that the recent sell-off in ULTA Salon (NASDAQ: ULTA) (-14% since 12/4) creates an attractive buying opportunity in a company that is gaining share & growing EPS on pipeline of unique brands, leading loyalty program, & shifting customer preference for specialty beauty. No change to Outperform rating or $200 PT.

Cowen views ULTA as a compelling retail growth story for 3 reasons:

1) Strong new store productivity driven by solid fundamentals (real estate, brand awareness, merch. assortment, service)

2) Un-Amazon-able characteristics of being a specialty beauty retailer: consumer's need for in-store product testing & in-store service options

3) Plenty of growth drivers ahead to fuel comps & margin over the L-T: in-store services, CRM, infrastructure improvements to gain scale, online.

ULTA is one of the few retail stories that is currently boasting robust square footage growth (+13% in 2015), as well as strong new store productivity. The store base was 860 at the end of 3Q15, and management expects to end the year with ~874 stores (+100 net new stores y/y).

For an analyst ratings summary and ratings history on ULTA Salon click here. For more ratings news on ULTA Salon click here.

Shares of ULTA Salon closed at $159.17 yesterday.

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