If you shop for beauty products, you have more choices than ever. Sephora sits inside Kohl’s, Amazon sells prestige brands, and Target went all-in on its own beauty push after its split with Ulta, as TheStreet reported.
That crowded field has made investors nervous about Ulta for most of 2026. The worry is simple: if shoppers can find the same lipstick anywhere, why make the trip?
Ulta is still growing anyway. Net sales rose 8.9% to $3.04 billion in the second quarter, and comparable sales climbed 3.8%, according to the company’s earnings release dated Aug. 27.
“Our team delivered another impressive quarter of strong sales, profit, and earnings growth,” CEO Kecia Steelman said in the release.
However, Wall Street wanted proof that growth would hold up in the back half of the year, when the comparisons get harder.
According to a Bank of America research report reviewed by TheStreet, that proof may already be showing up on Ulta’s website. Visits to Ulta.com jumped 48% from a year earlier in September, the bank said, citing Similarweb data.
What Bank of America found in Ulta’s web traffic
The September jump wasn’t a one-off. Site visits rose 38% through the first nine months of the year, with growth above 30% every month since April, wrote BofA analyst Lorraine Hutchinson in the Oct. 20 note, titled “Higher web traffic creates opportunity for 2H comp upside.” That is a long streak for a retailer whose stock was punished over growth fears just two months ago.
“Consumers are engaged, and we are optimistic about ULTA’s ability to convert this higher traffic into sales,” Hutchinson wrote.
Digital sales have grown at a rate between the low double digits and the mid-teens in recent quarters, the bank said, yet they make up only about 20% of revenue. Steelman said on the August call that e-commerce posted its “sixth consecutive quarter of double-digit sales growth,” according to the Motley Fool transcript.
Related: Ulta Beauty’s move to win back shoppers takes a new turn
That’s where the bank sees upside. Ulta’s guidance implies second-half comparable sales growth of 2% to 3%, and Chief Financial Officer Chris DelOrefice confirmed that range on the call.
The stock has already moved. Shares fell about 3% to $524 in after-hours trading on Aug. 27 as investors fretted about slowing growth, Investing.com reported. By Oct. 20, they stood at $591.62, according to the BofA note, a gain of roughly 13% by my math.
Beauty spending keeps beating the rest of retail
The broader category is giving Ulta room to run. Prestige beauty sales rose 7% to $17.1 billion in the first half of 2026, and mass beauty climbed 7% to $39.2 billion, according to Circana on Aug. 11.
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Skincare led prestige with 9% growth, while mass fragrance jumped 15%, Circana said. “Fragrance remains a key avenue for affordable luxury and self-expression,” said Larissa Jensen, Circana’s global beauty industry advisor.
Bank of America’s own card data tell a similar story. Beauty spending rose 6.5% in the third quarter versus 4.8% for total retail excluding autos, the bank said, and the gap widened in September to 8.6% versus 6.3%.
Here is what Ulta and the bank point to as the drivers:
- Bolder makeup: Steelman flagged “this fuller face look, more expressive eye” as a trend heading into the back half, according to the Motley Fool transcript.
- Wellness: Steelman said wellness “could be one of our next big pillar categories,” and BofA noted most loyalty members already buy wellness products elsewhere.
- Social reach: Ulta’s TikTok followers are up 27% this year and Instagram engagement is up 83%, Bank of America said in the note.
- Competition: “We expect the battle for share to remain intense,” Steelman said on the call.
Given that backdrop, it’s easy to understand why Hutchinson thinks Ulta’s heavy spending on loyalty, systems and supply chain is starting to pay off.
Why a $700 price target hinges on turning clicks into sales
The bank now values Ulta at 22 times its fiscal 2027 earnings estimate of $31.86 a share, up from 20 times. That multiple sits at the top of the 19-to-22 range for high-quality peers and below the 25 to 27 times that steady compounders fetch, Hutchinson wrote.
For the current year, BofA expects $28.74 a share, inside the company’s raised guidance of $28.70 to $29.00. It sees earnings growing about 12% this year and 11% the next.
There’s one catch in the data that I think investors should keep in mind. The Similarweb figures track Ulta.com only, the note says, and they exclude the app, which Steelman said accounts for “more than 60% of online sales.”
That cuts both ways. The website surge could be shoppers browsing more before buying in stores, which the bank says still counts for an omnichannel retailer. It could also mean the app-heavy core of Ulta’s digital business is growing more slowly than the headline number suggests.
Much will likely depend, however, on whether Ulta can turn visits into orders during a promotional holiday season. Management already acknowledged a more promotional environment in August, the Investing.com report found.
Target’s exit adds another wrinkle. The traffic acceleration since April overlaps with the wind-down of Ulta’s shop-in-shops inside Target stores, and in my analysis some of those shoppers may simply be finding Ulta online instead. The note doesn’t make that link, so treat it as a theory worth watching in the third-quarter report.
For your wallet, a busier Ulta.com usually means more personalized offers aimed at keeping you loyal. Check your rewards account before you buy elsewhere this holiday season. I’d also compare prices across Ulta, Sephora and Amazon before checkout, since the same products often sit at all three.
Bank of America’s view is that the investment cycle is turning into a harvest. “The trends support our view that ULTA can now harvest gains from prior investments and reinforce the value of ULTA’s omnichannel model,” Hutchinson wrote.
Related: Ulta Beauty has left Target, here’s what’s replacing it