Shares of Ulta Beauty (ULTA) dropped in morning trading after the beauty retailer issued fourth quarter guidance that missed analyst expectations. Ulta beat on third quarter earnings per share and posted revenue that matched expectations. EARNINGS: After the market close on Thursday, Ulta reported third quarter EPS of $1.70, beating analysts’ consensus estimates of $1.67, on revenue of $1.34B, meeting the consensus forecast. Comparable store sales were up 10.3% in the quarter, including e-commerce, driven by 6% transaction growth and 4.3% growth in average ticket. The company said that Hurricanes Harvey and Irma resulted in approximately $14M in lost sales for the quarter and approximately 100 basis points of negative impact to comp sales. E-commerce sales jumped 62.9% to $119.8M in Q3, from $73.6M last year. CEO Mary Dillon noted that Ulta faced a “moderation” in the growth rate of makeup, its largest category, and a “meaningful disruption” from the hurricanes in Q3. Looking ahead, Ulta forecast Q4 EPS of $2.73-$2.78, missing estimates of $2.84, on revenue of $1.926B-$1.959B, against the consensus of $1.93B. Comp sales for Q4 are expected to be up 8%-10% including e-commerce vs. an increase of 16.6% in the year-ago period. Despite the weaker than expected Q4 guidance, Ulta backed its fiscal year 2017 EPS view of growth in the high twenties percentage range, including the impact of the hurricanes and other items. Ulta also expects to achieve comp sales growth of 10%-11%, including e-commerce, and e-commerce sales growth of 50%-60%. WHAT’S NOTABLE: On October 18, Piper Jaffray analyst Erinn Murphy downgraded Ulta, citing a survey showing a slowdown in beauty spending by teenagers. Murphy said her firm’s Fall 2017 Teen Survey results indicated spending declines of 13% in color cosmetics among all female teenagers. While skincare declines were “less bad,” down 7% year-over-year, overall beauty wallet was down low-double digits. ANALYST COMMENTARY: Following Ulta’s earnings report, RBC Capital, Wells Fargo, Cowen and Morgan Stanley all cut their respective price targets for Ulta shares. Loop Capital analyst Anthony Chukumba, however, said Ulta’s results were impressive given the negative impact from Hurricanes Harvey and Irma, adding that the gross margin decline was largely related to those events. JPMorgan analyst Christopher Horvers noted that management re-committed to 20%-plus earnings growth in 2018 and believes this “will likely stave off what could have been a tough day for the stock” given the 110 basis point decline in gross margin for Q3. Jefferies analyst Stephanie Wissink said Ulta’s earnings report was “positive” for Estee Lauder (EL), as MAC and Clinique were cited as major contributors to the company’s 10.3% reported comp. PRICE ACTION: Ulta Beauty is down over 6% in morning trading to $208.25. Year-to-date, shares are down over 18%. Peer Sally Beauty (SBH) is also fractionally lower this morning.