Investing.com – William Blair on Thursday downgraded Ulta Magnificence Inc (NASDAQ:). to “market carry out” from “outperform,” citing a slower-than-expected restoration within the magnificence class and longer-term dangers from on-line competitors.

Analyst expressed doubts concerning the retailer’s capacity to fulfill 2025 progress targets and working margin expectations set at its lately.

William Blair famous that whereas Ulta has reset expectations, the consensus view of a pointy restoration in magnificence business gross sales by early 2025 seems overly optimistic. The agency believes softness within the magnificence sector, following pandemic-driven highs, remains to be in its early phases and {that a} vital rebound is unlikely till at the least the second half of 2025.

“We additionally preserve that there’s a longer-term danger embedded within the magnificence class migration on-line, which is doubtlessly in probably the most damning section because it pertains to retail cannibalization and drives heightened, extra dynamic competitors,” William Blair analyst Dylan Carden wrote in a observe.

The report additionally flagged the rising shift towards on-line magnificence purchasing, which poses a systemic danger to brick-and-mortar retailers like Ulta. Analysts described the present section of digital migration as “doubtlessly probably the most damning” for conventional retail, driving heightened competitors and retail cannibalization.