Ulta downgraded due to lofty stock price

NEW YORK (AP) -- An analyst lowered his rating for Ulta Salon, Cosmetics & Fragrance Inc. on Monday, citing its lofty stock price.

Randal Konik of Jefferies said in a client note that Ulta's shares are up almost 50 percent since April and have passed his price target.

"We believe fundamental strength and earnings per share upside will persist, but we now see shares pricing in most of the good news and outlook," he wrote.

Konik continues to be upbeat on the beauty company's future, saying Ulta is well positioned under new CEO Mary Dillon. He anticipates gross margin continuing to benefit from stronger merchandise margins and more prestige brands and is so far encouraged by management's execution on strategic initiatives.

Ulta declined to comment.

Konik cut Ulta to "Hold" from "Buy" and kept a $120 price target. Ulta's stock fell 86 cents to $116.86 in morning trading after sinking as low at $116.01 earlier in the session. The stock hit a 52-week high of $121.50 on Thursday.