The fact that shares aren’t breaking down is pretty impressive. That’s after the company reported a somewhat disappointing quarter.
Revenue declined 7.7% year over year, while earnings dropped more than 40%. Same-store sales fell 8.9%, although that was better than the 9.6% decline analysts were expecting.
However, adjusted earnings of $1.64 a share beat estimates of $1.51 a share, while revenue of $1.55 billion barely missed estimates of $1.56 billion.
Put it all together and Ulta holding up with a slight dip should be considered a win by the bulls. Particularly as shares rallied 33% in November.
Let’s take a look at key support.
Ulta sports a wide range, as evidenced by the weekly chart above. You may notice that even though the stock is down about 4% on the day, shares are only down 1.1% for the week.
If we get a pullback in the stock, there is an area that needs to hold, which is between $258 and $265.
There Ulta will find the 50-week moving average, as well as the 200-week moving average. The latter has been an important area of both support and resistance over the years.
That fact is highlighted with blue circles on the chart. Once this level was lost in mid-2019, it was resistance until 2020. However, Ulta’s time above the 200-week moving average was short-lived thanks to the coronavirus.
In addition to the 200-week moving average, $258 was also resistance in June and August. As unwelcoming as a dip can be for the bulls, a decline into the $260 area that holds as support would be a rather bullish development.
Below $258 and the 10-week moving average, and perhaps Ulta will have a bit further to fall.
On the upside, $290 has clearly been resistance over the past three weeks. Above that mark and this week’s high at $293.52 could put the 2020 high on the table at $304.65.
Above that and Ulta investors can start to use $360 as a longer-term price target, which was resistance in 2019.