By Liz Moyer
Investing.com -- Cash-strapped consumers are making tradeoffs at the cash register, buying food and putting off purchases of clothing and home decorating items, but they haven’t stopped buying beauty products, according to some analysts.
On Tuesday, Deutsche Bank’s Michael Lasser called out Ulta Beauty Inc (NASDAQ: ULTA ), the cosmetics and beauty product retailer, which is set to report earnings later this month. Lasser kept a buy rating on the shares and a $500 price target, brushing aside worries about slowing consumption.
Lasser said Ulta shoppers have shown they are still interested in buying products, and their engagement “remained strong” in the recent quarter. Ulta shares were up 1.9% on Tuesday and are up about 0.4% for the year.
Currently trading around $411, Lasser’s price target assumes 21% upside.
The call comes a day after an Oppenheimer analyst also said the quarter should be another “beat and raise” quarter. The analyst has an outperform rating on the stock with a $485 price target.
One of the drivers of sales is a partnership Ulta has with Target Corporation (NYSE: TGT ), which is opening hundreds of smaller Ulta stores within its own stores and eventually plans to have such outposts in 40% of its U.S. locations.
Target reports earnings early Wednesday, and it could talk about sales in the beauty category on its conference call. Analysts expect the retailing giant to report earnings of 80 cents a share on revenue of $26.1 billion.
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