Is Ulta Beauty Stock Going to $485? 1 Wall Street Analyst Thinks So.

Ulta Beauty (NASDAQ: ULTA) has recently gotten much attention because of the large stake unexpectedly purchased by Warren Buffett 's Berkshire Hathaway . With a higher profile, the cosmetics retailer is also winning attention from a clutch of analysts, with one of those pundits recently modifying his price target on the shares.

Price target reduced; bullish stance maintained

Baird's Mark Altschwager recently cut said price target to $485 per share from his preceding $525. That doesn't make him an Ulta bear, however, as he thinks the retailer still has plenty of potential upside even at the reduced level -- it's 28% higher than the most recent closing share price, so he has maintained his overweight (i.e., buy) recommendation.

Altschwager's new take on the company came less than a week before it was scheduled to release its second-quarter results. Analyst expectations are fairly modest ahead of Thursday's report. Collectively, the numerous pundits now following Ulta stock are modeling an 8% year-over-year decline in earnings per share (EPS) to $5.52, although they're counting on revenue to rise by 4% (to $2.62 billion).

The Baird prognosticator reduced his own estimates for the quarter, citing "choppy demand indicators," and assertive promotional activity, which tends to hurt margins. However, at the company's current low valuations "we continue to see good risk/reward for a high-quality name, but patience may be required."

A solid player no matter what

I think Altschwager -- and Buffett, while we're at it -- is on to something here. Retail is a tough game, but Ulta competes in an interesting way with its in-store salon model, and its sprawling product selection across all segments, price levels, and categories. It also has a very effective loyalty program, which isn't easy for even the top retailers to build or maintain.

Admittedly, near-future fundamentals don't look so hot. But, again referring to the Barid analyst's take, Ulta is cheap enough these days on valuations to take a shot. I feel this stock has notably more upside potential than downside, and it's worth considering for any portfolio.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Ulta Beauty. The Motley Fool has a disclosure policy .