According to Oppenheimer, Berkshire’s investment in Ulta Beauty will help mitigate potential losses.

According to Oppenheimer, Ulta Beauty investors have found some reassurance in Berkshire Hathaway’s recent investment in the company, which was announced just before the earnings report. Although Oppenheimer anticipates that the earnings will fall short of expectations and that the full-year outlook will be revised downward, analyst Rupesh Parikh believes that Berkshire’s involvement will mitigate the impact of a potentially disappointing quarter. Parikh noted on Tuesday that the Berkshire Hathaway stake could help stabilize the stock, viewing it as a sign of confidence in Ulta’s long-term potential and a validation of its currently low valuation. In August, a regulatory filing revealed that Warren Buffett’s conglomerate had invested $266 million in Ulta Beauty, causing the stock to jump by 11%. This investment is seen as a strategic move, especially given the stock’s struggles throughout the year. Ulta Beauty’s shares have dropped over 23% in 2024 due to weak demand for beauty products. CEO Dave Kimbell mentioned in April that the decline in demand happened faster and was more significant than anticipated. FactSet analysts predict earnings of $5.52 per share on $2.6 billion in revenue for the upcoming quarterly results on August 29, but Oppenheimer’s forecast is slightly lower at $4.99 per share. Parikh added that while the Berkshire investment complicates the short-term outlook, long-term investors should consider buying on any dips, attracted by the discounted valuation and potential growth initiatives expected in FY25 and beyond.