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Investors in Ulta Beauty have a lifeline thanks to Berkshire Hathaway’s recently announced stake in the company ahead of earnings results, according to Oppenheimer. While the firm expects a below-expectations report and a trimmed-down full-year outlook, analyst Rupesh Parikh posits that the Berkshire news will soften the blow of a potentially weak quarter. “We believe the recently announced Berkshire Hathaway stake could provide downside support for shares from here,” Parikh wrote Tuesday. “[W]e view this development as a vote of confidence for the company’s longer-term prospects and a further validation of ULTA’s significantly discounted valuation.” An August regulatory filing showed the Warren Buffett-helmed conglomerate took a $266 million stake in the cosmetics company , which sent shares soaring 11%. The stake has largely been labeled a value move following stock pressure for most of the year. ULTA YTD mountain Ulta Beauty stock. Shares of Ulta have pulled back more than 23% in 2024 as beauty demand remains sluggish. Chief executive Dave Kimbell warned in April that while the company had expected demand for beauty products to slow, the speed of the pullback occurred ” a bit earlier and bit bigger than we thought . ” Analysts polled by FactSet forecast earnings of $5.52 per share on revenue of $2.6 billion for the quarterly results due Aug. 29. Oppenheimer is slightly below consensus, however, with a $4.99 per share forecast. “We believe the [near-term] setup is now trickier with the Berkshire investment, but for longer-term players, we would continue to take advantage of any dips,” the analyst added. “We remain attracted to a discounted valuation and await new management efforts to drive growth in FY25 and beyond.”
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