Good news came for Ulta Salon’s cosmetics division today as InvestorsObserver analysts identified the brand as being well-positioned for a 'new covered call'.
The analysts say buying Ulta stock for $85.71 while selling the March $82.50 call will produce a break-even point for the brand at around $79.61.
This trade will have roughly 7.1 % downside protection, while still aiming for a 3.6 % return in 47 days.
"At that price, this position has a target return of 3.6%," say InvestorsObserver analysts.
A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities.
The long position in the underlying instrument is said to provide the "cover" as the shares can be delivered to the buyer of the call if the buyer decides to exercise.
Elsewhere; KeyCorp’s analysts also price objective points to a potential upside of 19.76% from Ulta's current price.
Equities research analysts report Ulta to have traded up 1.74% on Monday, hitting $84.95. 752,061 shares of the company’s stock traded hands.
The stock’s 50-day moving average is $89.37 and its 200-day moving average is $107.7. The company has a market cap of $5.457 billion and a price-to-earnings ratio of 27.39.
News to come as relief after receiving bad press of late..
At the end of last year Ulta provided a somewhat grim outlook in terms of its' growth forecast, and is yet to reveal its sales figures from over the holidays, which spurred rumours and left investors concerned that it may not have much positive news to share.
The retailer which currently operates 664 locations in the US, has seen its stocks gain momentum in 2013 despite both its' CEO and CFO resigning, however on releasing its third-quarter results in December, the company missed estimates on both the top and bottom lines, coming in much weaker-than-expected.
In that report Ulta stated that it expected to earn $1.07-$1.10 per share on revenue of $853 million - $867 million rather than the $1.24 per share on revenue of $895 million that analysts had initially expected.