12:30 PM EST, 01/10/2025 (MT Newswires) -- Ulta Beauty ( ULTA ) shares remain "underowned" and offer a "very attractive setup for further outperformance" given recent developments, Oppenheimer said in a note emailed Friday.

"Following a positive business update earlier this week, we have been perplexed by the move lower in shares," the firm wrote in a note.

Ulta Beauty ( ULTA ) on Monday revised its Q4 outlook due to "stronger-than-expected performance during the holiday season."

The company said it now expected comparable sales to "increase modestly" and operating margin to be above the high-end of its previously expected range of 11.6% to 12.4%.

Oppenheimer said it was "increasingly confident" in Ulta management's ability to sustain over 12% in operating margin over time and drive back toward a 3% to 4% comp sales.

The firm said it was re-adding Ulta to top pick status following the stock's removal last July due to concerns of a potential guide-down at the time.

Oppenheimer said it looked favorably at the company's long-term prospects for a number of reasons, including its potential to deliver above-average growth rates in retail.

The firm has an outperform rating on the stock with a price target of $515.

Price: 420.72, Change: +5.58, Percent Change: +1.34