11:46 AM EDT, 07/15/2024 (MT Newswires) -- Aggressive promotional activity by Ulta Beauty ( ULTA ) indicates "ongoing challenges" at the beauty retailer and poses potential risks to its full-year guidance, Oppenheimer said Monday.

Oppenheimer cut Ulta Beauty's ( ULTA ) earnings per share estimates to $24.25 from $25.20 for fiscal 2024 and to $26.50 from $27.50 for fiscal 2025. The forecasts reflects "more conservative" comparable sales growth expectations, it said.

The brokerage gave Ulta Beauty ( ULTA ) a top pick status last month, saying at the time that the stock presented a favorable risk/reward opportunity. However, the firm said Monday that the company has likely remained aggressive year over year with its promotions through mid-July.

"We are unclear what management has explicitly built into guidance on the promotional front, but our tracking of promotions suggests fairly aggressive efforts on a YoY basis have continued," analysts Rupesh Parikh and Erica Eiler said. They stripped the stock of their top pick status and decreased the company's price target to $450 from $475.

However, Oppenheimer affirmed its outperform rating for Ulta Beauty ( ULTA ), as it believes the management team's efforts could "eventually" drive an acceleration in comparable sales. The firm said Ulta Beauty ( ULTA ) has favorable long-term prospects, with the possibility of delivering "above-average growth rates" in the retail industry.

In May, Ulta Beauty ( ULTA ) reported fiscal first-quarter results. EPS came in at $6.47, down from $6.88 a year earlier. Analysts polled by Capital IQ expected $6.28.

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