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The Ratings Game: Analysts turn bearish on Ulta as beauty sector, same-store sales growth slows

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Ulta’s same-store sales deceleration is causing some analysts concern

Ulta Beauty Inc. was supposed to have a moat against Amazon.com Inc., but it looks like the moat could be drying up, BMO Capital Markets analysts say.

Ulta ULTA, -9.14% was downgraded to market perform from outperform at BMO as the beauty sector slows, creating hurdles for a company that analysts led by Shannon Coyne say has a lot of advantages, like digital competence and a loyalty program that can be monetized.

BMO cut Ulta’s price target to $235 from $345.

A sluggish beauty market makes it harder for older stores to gain market share; department stores are getting more promotional and launching their own beauty-focused loyalty programs; and Amazon AMZN, -0.75% is both gaining in the mass beauty area and could be a threat on the prestige side with its Violet Grey partnership.

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