In summary, the revised price target by Bernstein reflects an optimistic outlook for Lululemon's performance in the upcoming quarters, particularly in the Americas, where a turnaround is expected to commence from the first quarter onwards.
With a PEG ratio of 0.4 and strong revenue growth of 13%, the company shows promising fundamentals. Discover more insights and 12 additional ProTips for LULU with a subscription to InvestingPro, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks. With a PEG ratio of 0.4 and strong revenue growth of 13%, the company shows promising fundamentals.
Discover more insights and 12 additional ProTips for LULU with a subscription to InvestingPro, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks. This response was attributed to a combination of a short squeeze and growing confidence in the company's prospects for fiscal year 2025 and beyond.
The analyst noted that Lululemon's business in the Americas has reached a turning point and anticipates a positive shift in the first quarter, citing easier comparisons and an improved product range. The company's solid fundamentals support this outlook, with impressive gross profit margins of 58.5% and a healthy current ratio of 2.43.
Despite a stagnant growth rate in the Americas and the United States, which was consistent with the second quarter, the analyst believes this stabilization was the sign investors were looking for to adopt a more positive stance.
Looking ahead, the forecast for the fourth quarter remains subdued, with an expected 2% decline in comparable store sales. However, the analyst predicts that the situation will improve thereafter. The anticipation of easier comparisons and a stronger Spring product lineup is expected to lead to a rebound in positive sales growth.
Additionally, the analyst highlighted that the business in China continues to advance at full speed. This ongoing momentum in China, coupled with the projected recovery in the Americas, has led to an increase in earnings estimates and an expansion of the valuation multiple to reflect the uplifted investor sentiment.
In summary, the revised price target by Bernstein reflects an optimistic outlook for Lululemon's performance in the upcoming quarters, particularly in the Americas, where a turnaround is expected to commence from the first quarter onwards.
In other recent news, Lululemon Athletica (NASDAQ:LULU) Inc. has seen several positive developments. The company's third-quarter earnings per share of $2.87 exceeded expectations from Raymond (NS:RYMD) James and the Street, with a revenue growth of 9% to $2.40 billion, surpassing the anticipated 7% increase.
Raymond James has maintained an Outperform rating, raising the price target to $400. The firm noted Lululemon's sustained growth prospects, particularly in international markets and its men's segment.
Citi has also maintained a Neutral rating but increased the price target to $380, following impressive third-quarter sales and earnings per share. TD Cowen adjusted Lululemon's price target to $383, sustaining a Buy rating, reflecting confidence in the company's robust 30% year-over-year growth in international markets.
Meanwhile, Piper Sandler maintained a Neutral rating on Lululemon, with a consistent price target of $260.00.
These recent developments follow Lululemon's reported 7% rise in second-quarter total revenue to $2.4 billion, and earnings per share of $3.15, surpassing the expected $2.94. However, the fiscal year 2024 sales growth forecast was revised from 11-12% to 8-9%. Analyst firms like Morgan Stanley (NYSE:MS), Baird, and Truist Securities have responded positively to these developments, maintaining their positive ratings and adjusting their price targets to reflect current trends.
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