Analysts say investor concerns about Alta are ‘overblown’
Warren Buffett’s Berkshire Hathaway (BRK-B, BRK-A) has acquired a stake in Ulta (ULTA), according to a recent regulatory filing. Loop Capital Markets Managing Director Anthony Chukumba appears on Market Domination to discuss the move and analyze the bull case for the beauty retailer. Chukumba explains that “in some ways, Warren Buffett is almost like the original value investor.” So that was probably the approach Berkshire Hathaway took when they decided to invest in Ulta. He notes that the company’s shares have fallen “pretty substantially” as competitors like Sephora and Amazon (AMZN) have gained market share. Loop Capital currently rates Ulta a Buy with a $520 price target. Chukumba adds, “The fact that Berkshire is involved in this stock is certainly a positive. It lends credibility to this story.” He calls concerns about the company “exaggerated” and sums up his bullish view on the company: “The company has both mass, or lower-priced, products, and luxury, or higher-priced products. It has a great customer loyalty program. The company’s balance sheet is completely debt-free. The company is generating a lot of free cash flow. The company has been buying back its shares quite aggressively. I believe the company will initiate a dividend later this year, which will open up the company to income investors as well.” For more expert insights and the latest market trends, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl.