Ulta Beauty, Inc. (NASDAQ:ULTA) shares experienced a notable decline on Wednesday, driven by a downgrade from Piper Sandler and lowered price targets from multiple analysts.

Why It's Moving: Piper Sandler analyst Korinne Wolfmeyer downgraded Ulta Beauty from Overweight to Neutral and reduced the price target from $494 to $404. Additionally, Wells Fargo analyst Ike Boruchow maintained an Underweight rating on Ulta Beauty and lowered the price target from $350 to $325.

Earnings and Guidance Analysis:

1. Competitive and Promotional Challenges: Piper noted Ulta Beauty faces increasing competition from Sephora, which has expanded its presence through over 1,000 store fronts within Kohl's locations, many of which overlap with Ulta's stores. Additionally, Amazon's growing presence in the beauty market adds pressure.
2. Slowing Loyalty Membership and Customer Engagement: Ulta's loyalty program growth has slowed and customer engagement metrics have shown signs of weakening, according to the firm.
3. Investor Day Expectations: With an upcoming investor day in October, analysts are focusing on Ulta's longer-term expectations. The promotional dynamics, weaker comparable store sales and other headwinds (such as product mix, inventory shrinkage and wage increases) could potentially more than offset management's transformation initiatives.

ULTA Price Action: Ulta Beauty shares fell 5.3% to $368.56 according to Benzinga Pro.

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