Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) Slips From All-Time Highs

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Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) stock experienced something rare for the beauty retail store on Friday: losses. ULTA stock was off 5% in early trading thanks to a small crack in what has been an otherwise outstanding performer.

Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) stock

Ulta Salon did make its second-quarter numbers. Earnings of $1.43 per share were up 24% year-over year. That wasn’t quite the 39% increase from Q1, but it was still enough to beat expectations of $1.39 per share of ULTA stock.

Revenues also surprised to the upside. Sales improved by nearly 22% to $1.069 billion, topping estimates for $1.06 billion. That came on 14.4% growth in comparable-store sales and a nearly 55% surge in e-commerce sales.

No, it was earnings guidance that knocked ULTA stock off its perch.

Ulta gave a third-quarter earnings outlook of $1.25 to $1.30 per share. While the top end managed to beat out expectations for $1.29, the midpoint fell shy. That even overshadowed revenue guidance of $1.072 billion to $1.09 billion, which was enough to carry it over the hump. Investors also seemed to ignore the hike in full-year EPS expectations, now to a range of low to mid-20%.

ULTA’s drop took the stock well off all-time highs above $278 per share achieved earlier this week. Moreover, it was a rare change of pace for a stock that has climbed about 170% in the past two years.

Technically speaking, though, ULTA stock could actually be set up for a snap-back if investors’ confidence holds here. Shares have dropped down right against their 50-day MA around the $259 area. Ulta’s Relative Strength Index (RSI) reading, which has been above the overbought 70 mark for most of the past three months, has dipped below 50 for the first time since May.

Watch Friday’s close. Holding the $259 area — or better, bouncing a little off it — by the end of the day could bode well for a pause and a return to its long, long, long-time uptrend.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/ulta-salon-cosmetics-fragrance-inc-ulta-stock-slips/.

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