After a poor third quarter earnings report, and a reduction to its outlook, ULTA fell out of favor with investors – and fast. In fact, investors forced the stock from a high of $340 to $230
However, it now appears the stock is greatly oversold – with great insider buying to boot.
Over the last week, CEO and Director Mary Dillon bought $308,000 worth of stock. Director Charles Heilbronn also bought 243,800 shares in late September 2019. Trading at just 18.8x forward earnings, ULTA appears far too cheap.
And, as you can see, ULTA has a historical tendency to push higher in most holiday seasons going back to 2015. We can also see the stock a history of pulling back around this time of year, too before pushing aggressively higher. Near-term, we’d like to see a potential bearish gap refill at $340 a share. We also believe the gap lower was a severe overreaction.
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