Shares of Target and Ulta Beauty are falling Thursday morning. The companies released a joint announcement that their "Ulta Beauty at Target" shop-in-shop partnership will not be renewed.
A number of stocks jumped in the afternoon session after markets continued to rally amid growing investor optimism for a Federal Reserve interest rate cut in September. This optimism was spurred by a recent Consumer Price Index (CPI) report that did not show runaway inflation, increasing the perceived probability of a rate cut to over 90%. Lower interest rates are generally seen as a positive for the economy as they reduce borrowing costs for consumers, which can stimulate spending on non-essential goods. Consequently, investors bid up shares in the apparel, home furnishings, and automotive retail industries in anticipation of stronger consumer demand.
Shares of beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ:ULTA)
jumped 3.5% in the afternoon session after a tame inflation report boosted investor hopes for an interest rate cut from the Federal Reserve. The latest Consumer Price Index data showed the annual inflation rate held steady at 2.7%, reassuring investors who had feared that tariffs could lead to a spike in consumer prices. This milder-than-expected reading gives the Federal Reserve more flexibility to consider lowering interest rates, possibly as soon as next month. A potential rate cut could reduce borrowing costs for consumers and businesses, stimulating more spending and providing a significant boost for the retail industry. Adding to the optimism, reports of a 90-day tariff truce with China further eased concerns about future price pressures.
Wall Street’s bearish price targets for the stocks in this article signal serious concerns.
Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
Looking back on beauty and cosmetics retailer stocks’ Q1 earnings, we examine this quarter’s best and worst performers, including Ulta (NASDAQ:ULTA) and its peers.
These companies have enough profitability to keep delivering double-digit upside potential to investors in the coming years, especially at these prices.
Ulta has had an impressive run over the past six months as its shares have beaten the S&P 500 by 15.1%. The stock now trades at $496.96, marking a 18.8% gain. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Mark Cuban spent years on "Shark Tank," where he often invested in companies he could help or could use with his NBA team. Here's one of the exceptions he made.
ULTA Beauty (NASDAQ:ULTA) is a high-quality stock with strong profitability, zero debt, and solid growth prospects, making it a candidate for long-term investors.
