Makeup retailers are reeling on big-cap competition concerns
The shares of Ulta Beauty Inc (NASDAQ:ULTA) are in the red this afternoon, after FAANG name Amazon.com (AMZN) unveiled the Amazon Professional Beauty Store for state-licensed cosmetologists, stylists, and aestheticians. Ulta -- which sells cosmetics, including Kylie Jenner's brand -- and other beauty stocks are reeling in light of the big-cap competition, and ULTA put options are flying off the shelves today.
ULTA was last seen 3.8% lower at $342.16, set for its worst session in nearly two months. Despite today's drop, the equity still remains more than 50% north of its Dec. 24 low of $224.43. Since gapping higher in March, the security has been consolidating in the $330-$360 neighborhood, and touched a record high of $365.53 just last Thursday, June 20.
At last check, ULTA has seen roughly 5,700 puts change hands -- two times the average intraday put volume. It looks like some traders may be buying to open the weekly 6/28 345-strike put, which is among the most active options today. By doing so, the speculators expect Ulta Beauty stock to extend its retreat south of $345 through the close on Friday, June 28, when the options expire.
Should ULTA barrel below recent support in the $330-$335 range, and possibly close the aforementioned bull gap, the equity could be vulnerable to an analyst backlash. Amid the stock's run to all-time highs, Ulta Beauty has racked up 15 "buy" or better ratings, compared to five lukewarm "holds" and not a single "sell."
However, it's worth noting that ULTA recently found itself on our list of the best stocks to own between May and October, per data from Schaeffer's Senior Quantitative Analyst Rocky White. ULTA averaged a gain of 23.5% over the past 10 years during this six-month stretch, the best on the list.