If there is any company to own in the retail sector, this may be the one. Ulta Beauty Inc. (NASDAQ: ULTA) is a holding company for the Ulta Beauty group of companies. The company offers cosmetics, fragrance, skin, hair care products and salon services. It offers approximately 20,000 products from over 500 beauty brands across all categories, including its own private label. The company also offers a full-service salon in every store, featuring hair, skin and brow services.
Ulta Beauty operates approximately 970 retail stores across 48 states and the District of Columbia and also distributes its products through its website, which includes a collection of tips, tutorials and social content. The company offers makeup products, such as foundation, face powder, concealer, color correcting, face primer, blush, bronzer, contouring, highlighter, setting spray, shampoos, conditioners, hair styling products, hair styling tools and perfumes.
The analysts have stayed positive despite the roller-coaster ride this year, and the report noted this:
The focus on the 3/15 earnings print will be comp sales and merchandise margin and our checks continue to put comp in range (8-10% guide) and merch margin down near 50b basis points on mix and promos (vs. guide for flattish). We don’t see any reason to over-guide and therefore find a conservative 6-8% range reasonable and should create oppty for upside. We note that given the store opening compares, 53rd week, tax impact and an inconsistent consensus basis, clear explanation on the call will be as critical as confidence in execution.
The stunning $300 Jefferies price target compares with a $270.82 consensus price objective. The shares closed Monday at $207.62.
Varian Medical Systems
With a growing need for its services, this company has a very bright future. Varian Medical Systems Inc. (NYSE: VAR) is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy.
The company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center. Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer.
The analysts met with the company recently and noted this in their report:
We met with management during our recent bus tour. Company remains focused on expanding into other areas of cancer care beyond the radiation therapy/treatment planning core competencies. Company is targeting several other adjacencies including surgical oncology, medical oncology, precision medicine and diagnostic imaging. Near-term, we continue to see a strong growth trajectory driven by SirTex label extension and Halcyon product cycle.
Jefferies has a $114 price objective, which seems very low. The consensus target is $114.67, and shares closed way above both levels Monday at $126.55.
West Pharmaceutical Services
This below-the-radar company could offer a big upside for shareholders this year. West Pharmaceutical Services Inc. (NYSE: WST) is a leading manufacturer of components used for injectable drug delivery systems, including rubber stoppers and syringe plungers, and it offers contract manufacturing services to the health care and consumer products industry.
The company is currently augmenting its product portfolio by offering more proprietary products, including prefilled syringes, advanced injection systems and drug administration systems.
The analysts said this:
In addition to the improved product mix, which should drive 50-70 basis points of margin expansion annually, we also expect gross margins to benefit from better manufacturing efficiency. We expect substantial free cash flow improvement over the next few years and believe weakness in shares (down 9% YTD) presents an opportunity.
Jefferies has set its price target at $115. The consensus target is $101.38, and shares closed Monday at $92.01.
These stocks offer investors strength in their specific industries and the ability to avoid high-flying disasters. All of them are suitable for growth accounts with some degree of risk tolerance.
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