Loop Capital upgraded Ulta Beauty (NASDAQ:ULTA) to Buy from Hold, raising its price target on the stock to $520 from $490 per share in a note Tuesday.
Analysts explained that the firm believes "the nascent luxury brand expansion represents a multi-year comparable sales growth driver."
Ulta Beauty shares are up over 3% Tuesday, adding to its more than 5% climb over the last week. Loop Capital's new price target for ULTA represents a potential 22% upside from Monday's close.
"We also think the continued rollout of Ulta Beauty at Target (NYSE:TGT) shop-in-shops will drive incremental income as well as Ultamate Rewards memberships," the analysts wrote.
"Finally, we believe the recent uptick in shrink will dissipate over time and note Ulta Beauty generates strong free cash flow, which management consistently returns to its stockholders through share repurchases (and possibly cash dividends at some point)."