How will the termination of the Ulta Beauty-Target partnership affect ULTA's revenue forecasts?

Impact on revenue outlook

The termination of the Ulta‑Target partnership removes a modest but growing sales channel that had been projected to contribute roughly $70‑$90 million in incremental net revenue each year (≈2‑3 % of ULTA’s $4‑5 bn annual topline). Because the agreement expires only in 2026, the immediate impact on the FY‑2025 guidance is limited, but analysts will now strip the partnership‑related lift from the 2026‑2028 forecast models. Expect consensus revenue growth forecasts for 2026‑2028 to be revised down by roughly 0.5‑1.0 ppt on a CAGR basis, and the company’s internal “base‑case” guidance will likely be trimmed by a comparable amount unless other initiatives (e.g., expanded private‑label SKUs or new store formats) can offset the loss.

Trading implications

- Fundamentals: The partnership’s end reduces the “new‑store‑in‑store” upside that was baked into ULTA’s forward‑looking guidance. If management does not articulate a clear replacement strategy (e.g., accelerated digital‑first rollout or a new retail‑partner alliance), analysts may lower target prices by 4‑6 % and adjust earnings‑per‑share estimates downward.

- Technical: ULTA is currently trading just above its 50‑day SMA and above a short‑term resistance at $450; volume has been tapering, suggesting a potential consolidation phase. A break below the 50‑day SMA with increased volume could trigger a 3‑5 % downside move as the market re‑prices the revenue gap.

- Actionable take‑away: For risk‑averse investors, consider a modest reduction in exposure (e.g., trimming 5‑10 % of positions) and monitor the upcoming Q3 earnings call for any new growth drivers. Traders with a short‑term bias could watch for a break below the 50‑day SMA as a short‑entry trigger, while long‑term holders should focus on the company's ability to replace the lost partnership revenue with higher‑margin private‑label sales or a new omni‑channel strategy before the 2026 cut‑off.