📈 Resilient Trader Trade Idea: The Bullish Case for Ulta Beauty (ULTA)

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Every week, we cut through the noise and surface opportunities that institutions are already eyeing, but with strategies tailored for retail traders.

Today's setup: a best-in-class retailer poised for a breakout after a conservative guide reset expectations.

We'll cover:

• Why Ulta Beauty is a buy at current levels

• How to use a call spread for defined risk upside

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🔍 Trade Thesis: ULTA Is Set for a Breakout

Ulta Beauty (ULTA) has been a long-term winner, but the stock has been stuck in a range over the past year. However, we see a clear path to $ 600 or more.

Behind the scenes:

🚨 Beat-and-Raise Quarter: Q1 EPS of $6.70 vs. Street at $5.80, with guidance raised.

📈 Comps Inflecting: Comparable sales growth accelerating, driven by both ticket and transactions.

🌎 Mexico International Expansion: First two Mexico stores opened, with nine more planned this year.

💥 Sephora/Kohl's Tailwind: Ulta could capture share if Kohl's Sephora locations continue to struggle.

📊 Fundamentals Are Strong

💰 Revenue: $2.8B in Q1 2025, up 4.5% YoY

📈 Comparable Sales: +2.9%, from higher ticket size and more transactions

📉 Margins: Gross margin of 39.1%, operating margin of 14.1%

🏦 Balance Sheet: $454.6M cash, plus $2.3B share repurchase program

📌 Guidance: FY2025 outlook raised to $11.5B–$11.7B in sales

💎 Valuation: Attractive for Market Leadership

⚖️ P/E: 25x, fair for growth and leadership

🏷️ Price-to-Sales: 2.2x, in line with history

📈 Analyst Consensus: Average price target of $586.35, 13% upside

🧭 Technicals

✅ Long-Term Trend: Bullish, with support at key moving averages

✅ Support: $487.26

✅ Resistance: $531.06 (breakout level)

✅ Current: $519.07

🎯 Targets: $580 (initial), $600+ (intermediate)

💥 Trade of the Week: Bullish Call Spread

We're pairing stock ownership with an options play for leveraged upside.

🟢 Stock Setup

• Buy $ULTA ( ▼ 0.64% ) at $525.21

🛡️ Options Play

• Buy Jan 16th $530 Call: $39.50

• Sell Jan 16th $600 Call: $13.00

• Net Debit: $26.00

📈 Risk/Reward

• Max Risk: $26.00

• Max Reward: $44.00

• Breakeven: $556.00

• Risk-Reward: 1:2

🚀 Catalysts to Watch

1. Q2 2025 Earnings

2. International expansion updates (Mexico + Middle East)

3. Analyst upgrades

4. Breakout above $531 will attract momentum buyers

🛑 Risk Management

Set a stop-loss below the recent swing low at $475 to protect capital.

🧠 Final Thoughts

Ulta Beauty is a best-in-class retailer with plenty of growth ahead. Conservative guidance created a buying window.

✅ Buy ULTA at $519.07
💸 Buy Jan 16th $530/$600 Call Spread for $26.00

We'll be watching this one closely.

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