Remember when Warren Buffett—the guy who supposedly never makes mistakes—bought Ulta Beauty stock and then dumped it faster than a bad Tinder date? Yeah, well, that stock just jumped 13% in a single day, and somewhere in Omaha, the Oracle is probably face-palming.
Here’s the tea: Buffett’s Berkshire Hathaway bought Ulta Beauty (NASDAQ: ULTA) in Q2 2024, held it for about six months (which is like a nanosecond in Buffett time), and then sold the whole position by Q4. That’s gotta be one of his shortest relationships ever—and we’re talking about a guy who’s been married to Coca-Cola stock since the Reagan administration.
So what happened? Ulta just dropped some absolutely bonkers Q3 earnings that made Wall Street do a double-take:
- Net sales: $2.86 billion (up 13% year-over-year, beating estimates by $140 million)
- Earnings per share: $5.14 (same as last year but crushed the $4.64 estimate)
- Same-store sales: Up 6.3% (compared to a measly 0.6% last year)
The beauty retailer is basically having its main character moment. They opened 28 new stores, remodeled 15 others, and now have 1,500 locations across the U.S. That’s some serious real estate flex.
But here’s where it gets interesting: While net income actually dropped 5% (thanks to a 23% spike in operating expenses—apparently success costs money, who knew?), the company’s “Ulta Beauty Unleashed Strategy” is working like a charm. CEO Kecia Steelman basically said their marketing is “resonating with guests” and driving growth across all categories. Translation: people are buying more lipstick and mascara than ever.
The forward-looking stuff is even juicier: Ulta raised their full-year outlook like they’re updating their Instagram bio. They’re now calling for $12.3 billion in net sales (up from $12.1 billion), and bumped their earnings forecast to $25.20-$25.50 per share. That’s the kind of confidence that makes analysts reach for their calculators.
Speaking of analysts, they’re falling over themselves with price target upgrades. UBS went to $690 per share, DA Davidson hit $650, and others are clustering around $640. That suggests 6-14% upside over the next year—not bad for a stock that’s already up 41% year-to-date.
The plot twist? Nobody really knows why Buffett bailed so quickly. Maybe he got spooked by the competitive beauty market, or perhaps he just didn’t understand why people need 47 different shades of the same lipstick. Either way, his loss is clearly someone else’s gain.
At 20 times earnings, Ulta isn’t exactly cheap, but in a market where everything feels overpriced, it’s not outrageous either. Plus, with the holiday season in full swing and Black Friday/Cyber Monday already showing strong performance, this beauty stock might just keep making Buffett’s early exit look like a rare misstep.
Sometimes even the greatest investors get it wrong. And sometimes, the market has the last laugh.