Bullish Case: Ulta's growth initiatives, strong brand loyalty, and digital transformation continue to attract customers, driving steady revenue and potential stock upside. New leadership could enhance strategic direction.

Bearish Case: Market saturation, inflation, and increased competition challenge Ulta's margins and growth outlook. Supply chain disruptions and economic uncertainty add pressure, potentially impacting near-term performance.

Potential Outcomes:

• 45% chance strategic initiatives enhance growth.
• 30% chance ongoing competition and costs pressure margins.
• 15% potential stabilization amid market conditions.
• 10% chance of volatility due to macro factors.

Trading Oracle: Consider a bullish call debit spread targeting May expiration, such as buying ULTA $380 calls and selling $385 calls. This benefits from upward potential due to strategic initiatives and favorable implied volatility. Offers a high reward-risk ratio with positive alpha by leveraging current mean-reversion tendencies.

February 11, 2025