ULTA Beauty Stock Analysis 2026: After Buffett's Exit, What Now?

Warren Buffett's team spent $266 million buying ULTA Beauty in 2024 — then sold every share before the stock rallied 40%. Now, with ULTA trading 14% off its all-time high and management guiding for double-digit EPS growth, the uncomfortable question: was Berkshire's exit one of the great misreads of the cycle?

At $607.52, ULTA sits in an analytically interesting zone — below its February 2026 ATH of $706.82, above the skeptics' floor, and priced at 23.3x forward earnings against guidance that implies the business is accelerating, not decelerating. The Berkshire episode is more than a curiosity. It's a lens for the core debate: is ULTA a mature retailer running out of room, or a category leader mispriced after a sentiment reset?

Berkshire's $266M Exit — and the 40% Rally They Missed

The filing trail is unambiguous. Berkshire Hathaway disclosed its ULTA position in Q2 2024 via 13F (quarterly SEC filing disclosing institutional equity holdings) — approximately $266 million at an average cost basis well above where the stock had been trading. By Q4 2024, the position was gone. What followed was a 40% rally through 2025.

Exits at Berkshire's scale are rarely emotional. The team manages hundreds of billions and rotates with discipline. Our analysts note, however, that the timing stands out: Berkshire exited precisely as the fundamental picture was improving. Q4 FY2025 came in at $3.90 billion in net sales, up 11.8% year-over-year, with comp sales (comparable store sales — revenue growth at locations open for 12+ months) of +5.8%. EPS of $8.01 beat the $7.93 consensus. Full-year FY2025 revenue reached $12.4 billion with EPS of $25.64.

The most generous read of the Berkshire exit: they saw margin compression risks and a weakening consumer earlier than consensus. The less generous read: they sold a fundamentally sound compounder at the wrong point in the cycle. Either way, the stock answered with a 40% move they did not participate in.

What ULTA's FY2026 Guidance Actually Says About the Business

Management's FY2026 guidance — revenue of $13.1–13.3 billion, EPS of $28.05–$28.55 — is doing something specific: it is projecting double-digit EPS growth off a $25.64 base. That is not the guidance profile of a business in structural decline.

Gross margin held at 39.1% in FY2025. Operating margin at 14.1%. The team assesses these numbers as evidence that ULTA's pricing power within the prestige and mass beauty segments remains intact, even as the broader retail environment faces tariff-driven input cost pressure. Approximately 50% of beauty businesses are currently reporting tariff headwinds per the 2026 JLABS/CEW industry survey — which makes ULTA's margin stability more notable, not less.

At 23.3x forward P/E against $28.30 midpoint EPS guidance, the current multiple is pricing in growth but not perfection. The 38 Buy ratings from analysts, with a median target of $640 and a range of $440–$725, reflect genuine disagreement about whether the comp trajectory sustains or compresses. That spread — $285 between floor and ceiling — tells you something: this is not a consensus stock.

The Target Exit: Headwind or Hidden Tailwind?

The August 2026 closure of 600+ ULTA shop-in-shop locations inside Target drew the predictable headlines. Revenue exposure, lost traffic, channel shrinkage. Sentiment around the announcement was negative.

The averin.com analysis cuts differently. These were systematically low-productivity doors — selected for closure jointly by both companies precisely because the unit economics never materialized at scale. Stripping them out removes drag, not contribution.

This is the insight the market may be missing: the Target exit is potentially margin-accretive. The remaining store base — ULTA's freestanding locations — generates significantly higher revenue per square foot and carries none of the revenue-sharing friction built into the shop-in-shop structure. Fewer doors, better economics. The market appears to be pricing a headwind that the income statement will eventually reveal as a tailwind.

The international build adds a second dimension. The Space NK acquisition — 83 locations across the UK and Ireland, completed in 2025 — gives ULTA its first meaningful foothold outside the US, diversifying a portfolio that had been entirely domestic. The US beauty market has ULTA at 15.3% share versus Sephora's 18.2% (Euromonitor 2026), in a global beauty market now valued at $664.6 billion and growing at 6.6% annually. The gap to Sephora is real, but the addressable market expansion via Space NK is the structural response.

Is ULTA Stock a Buy at $607? What the Numbers Show

The team is not issuing a directional call here. What Ruslan Averin and the averin.com analytical framework focuses on is whether the current price reflects the business accurately — and the evidence is mixed in a specific way.

The bull case is mechanical: $28.30 midpoint EPS × a 25x multiple (reasonable for a category leader with 14% operating margins and international optionality) = $707.50. That is essentially the ATH. The market would need to re-rate ULTA to its prior premium for that math to work.

The bear case is equally mechanical: if comp sales decelerate post-Target exit and EPS lands at the low end of guidance near $28.05, a 20x multiple — reflecting mature-retailer skepticism — implies $561. That is 8% below current levels.

What sits between those poles is the execution question. Can ULTA's loyalty program (39+ million members) sustain traffic as the shop-in-shop channel closes? Does Space NK scale in a way that earns a higher multiple for the international segment? Does the tariff environment compress gross margin in the back half of FY2026?

At $607 and 23.3x forward earnings, the market is asking ULTA to answer those questions. The double-digit EPS guidance suggests management believes it can. Berkshire, having sold at the wrong moment once, is presumably watching with interest.

Analysis based on public filings, 13F disclosures, company guidance as of Q4 FY2025, and third-party market data. This is not investment advice.