Home Market Analysis Ulta Stock Could Reclaim Year-To-Date Breakeven In H2

Ulta Stock Could Reclaim Year-To-Date Breakeven In H2

by WOOWinvest
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Ulta Stock Could Reclaim Year-To-Date Breakeven In H2

Shares of Ulta Beauty (ULTA) have been consolidating just below $430 for the first half of the month, after surging following an impressive earnings report in late May, before losing some of that as volatility intensified in June power. However, ULTA’s performance is relatively weak compared to other markets. The stock still leads 14% year over year and is down just 4.9% in 2022. Additionally, multiple support levels have emerged on the chart, including a former upper limit in the $385 area, as well as a historically bullish trend line.

More specifically, cosmetic stocks have just retreated to their 260-day moving average after a prolonged period above this area. There have been two similar moves in the past three years, according to a study by Rocky White, a senior quantitative analyst at Schaeffer. One month after both events, ULTA was higher, with an average return of 7.8%. A similar advance would take the stock just below the $424 level.

Shares of Ulta Beauty were already on the rise, last up 1.7% at $392.52. Raymond James’ upgrade from “Outperform” to “Strong Buy” could bring some wind to the stock, as the analyst also raised his price target to $485 from $475. More analysts are likely to follow Raymond James’ lead, as 6 out of 22 reports still see ULTA as a “hold” to enter today.

The fading pessimism among options traders could give the stock additional momentum. On the International Stock Exchange (ISE), Chicago Board Options Exchange (CBOE) and Nasdaq OMX PHLX (PHLX), ULTA’s 10-day put/call volume ratio was 2.21, above all but 2% . past 12 months. In other words, options traders have been buying puts at a faster rate than usual.

Speaking of, using options to speculate on Ulta stock’s next move could be the way to go. The stock’s Schaeffer Volatility Index (SVI) of 39% is in the relatively low 27th percentile of its 12-month range, meaning options traders are currently pricing in low volatility expectations for the stock.

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