close icon

Ulta Beauty No Longer a Wall Street Darling

Ulta Beauty ‘s phenomenal uptrend started from $4.11 in March 2009 and did not stop until $368.83 in mid-July 2019. The company’s market value grew by almost 8900% in just ten years, easily earning Ulta a Wall Street darling status.

Unfortunately, Wall Street likes fast-growers only as long as they keep growing. Ulta Beauty reduced its EPS guidance in late-August, reinforcing the Street’s concerns that its growth is slowing, resulting in a 30% crash on August 30th. In total, ULTA stock is down by 38.9% in just two months. A Wall Street darling no more.

Is this a Dip to Buy in Ulta Beauty Stock?

However, despite growing more slowly now, the company is still profitable and debt free. It appears to be just what buy-and-hold investors are usually looking for – a strong business at a decent price. In order to find out if the recent plunge is indeed a buying opportunity, let’s take a look at it from another angle.

Ulta Beauty enters an Elliott Wave correction

The chart above puts Ulta’s entire rally since 2009 in an Elliott Wave context. As visible, the stock spent the past decade drawing a textbook five-wave impulse. The pattern is labeled (1)-(2)-(3)-(4)-(5), where the five sub-waves of wave (3) are also visible and wave (5) is an ending diagonal.

According to the theory, a three-wave correction in the other direction follows every impulse. If this count is correct, the sharp decline we saw in the last two months is part of a larger corrective pullback. Once wave (a) is over, a temporary recovery in wave (b) should occur before the bears complete the sequence in wave (c).

In our opinion, investors have to resist the temptation to buy the dip in Ulta Beauty stock. One day, when wave (c) is approaching its end near ~$160, the stock may become attractive again. We remain on the sidelines until then.

Did you like this analysis? Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Booking Stock Eyes Elliott Wave Support Near $1000

Social distancing measures in response to the coronavirus pandemic forced the global economy to grind to a halt. Among the many sectors that are now suffering, travel was probably hit the hardest. The market quickly reflected the new reality, punishing airline, restaurant and retail stocks. Booking Holdings, the leading player in the online travel industry,…

Read More »

Burlington Bears Returned with a Vengeance

Along with airlines and travel, retail has been among the industries hit the hardest by the coronavirus epidemic. Social distancing policies to contain the spread of the disease resulted in mall and store closures around the world. Burlington Stores is one of many victims. BURL stock exceeded $250 a share in mid-February 2020. A month…

Read More »

3i Stock Selloff Stopped by Fibonacci Support Level

3i stock was hovering around 1100 pence per share when we wrote about it in late-October 2019. The stock was up almost 1000% in ten years and few thought it was vulnerable to a significant decline. That was five months ago – before the coronavirus pandemic and the global stock market crash it triggered. But…

Read More »

Rational Stock Got Cut in Half. Is the Pain Over?

The last time we wrote about Rational AG was on February 5th. The stock had just reached an all-time high of 740 euro a share in January following a 17-year uptrend. With the price hovering around 690 at the time, new records seemed to be just a matter of time. On the other hand, no…

Read More »

Ulta Beauty Looks Attractive Amid COVID-19 Recession

In response to the spreading COVID-19 epidemic, Ulta Beauty decided Tuesday to join many other businesses in closing its stores across the U.S. Even without that drastic measure, social distancing was going to hurt Ulta’s business anyway. Sensing where things were going, the market pushed Ulta stock down very quickly. ULTA was trading above $300…

Read More »

SEIC Stock Enters Elliott Wave Buy Zone

Four months ago, we published an article on SEI Investments (NASDAQ:SEIC), saying that the “stock can lose half its value in a recession.” At the time of writing, November 5th, 2019, the economy was still firing on all cylinders and most analysts saw nothing but blue skies. And indeed, the unemployment rate was at a…

Read More »

Five Months Ahead of HollyFrontier ‘s Collapse

Oil stocks plunged across the board Monday following an epic OPEC+ negotiations failure. The price of oil was down over 31% yesterday after Saudi Arabia launched an all-out price war. One of the many casualties was HollyFrontier, which we covered over five months ago. HFC tumbled almost 16% to close Monday’s session at $24.10. And…

Read More »

More analyses