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Ulta Beauty is making money, and the technician is seeing more pain



Investors ditched Ulta Beauty in the extended session on Thursday.

Stocks fell 22% after hours after a loss of income and income. Comparable store sales were also below expectations.

Bill Baruch, president of Blue Line futures, says the stock could see more pain until it finds a bottom.

"This is a break below the 200-day moving average and breaks with the breakout trend," Baruch told CNBC's "Trading Nation" in a post-earnings email. "Support does not come in until now from $ 250 to $ 260."

Ulta traded at $ 265.30 on Thursday night. It must drop another 6% to reach the lower end of that band.

Baruch is bullish on another beauty stock: Estee Lauder. The name has risen more than 56% this year, making it the best-performing beauty stock. However, Baruch said on the Trading Nation earlier in the day that despite trading well above the 50- and 200-day moving averages, Estee Lauder's rally is only stable "as long as it stays above $ 1

95 to $ 197."

Estee Lauder is still 3% away from breaking below the upper end of that area.

Gina Sanchez, CEO of Chantico Global, says that despite increasing pressure on the wider retail space, Ulta is still most ready for the weather storm from a basic perspective.

"If you look at how Ulta has turned from just bricks and mortar to more of an online offering, their latest annual report will indicate that it will continue to drive their growth," she said Thursday. "So I think in retail they look fantastic, because beauty is very much a recession."

However, Sanchez warns investors to pay close attention to Ulta & # 39; s valuation, which she says has become a little too high.

"It deals with 24 times the subsequent valuation of price-to-earnings versus the future PE of 9 times," she explained. "I think that's one of the reasons it has worn out at this time, so we have to see how this valuation element shakes out."

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