On Tuesday, Bernstein analysts maintained their positive stance on shares of Lululemon Athletica Inc. (NASDAQ:LULU) shares, reiterating an Outperform rating and a price target of $460.00.
The reaffirmation follows Lululemon's announcement of an upward revision in its Q4 guidance before the ICR Conference, signaling stronger than anticipated performance. According to InvestingPro data, 11 analysts have recently revised their earnings expectations upward, while the company maintains a "GREAT" financial health score.
Lululemon has adjusted its Q4 sales expectations to a range of $3.56 billion to $3.58 billion, up from the previous forecast of $3.475 billion to $3.51 billion. This revision was anticipated, but it also came with an unexpected increase in margin guidance.
The company now projects its gross margin (GM) to grow by 30 basis points year-over-year, as opposed to the initially guided decline of 20 to 30 basis points. Moreover, selling, general, and administrative expenses (SG&A) are expected to deleverage 80 to 90 basis points, which is an improvement over the previously expected 90 to 100 basis points.
The updated earnings per share (EPS) are now projected to be between $5.81 and $5.85, a notable increase from the earlier range of $5.56 to $5.64. The midpoint of this updated EPS forecast is 3% higher than the consensus among analysts.
Management attributed the positive adjustment in guidance to the strong customer response to their product offerings during the holiday season, which allowed them to raise their fourth-quarter expectations. This performance underscores the brand's momentum and its ability to attract and retain customers with its product lineup.
In other recent news, Lululemon Athletica Inc. has raised its revenue and earnings expectations for the fourth quarter. The company now anticipates net revenue to be between $3.56 billion and $3.58 billion, marking an 11% to 12% increase year-over-year. The adjusted earnings per share (EPS) are expected to be between $5.81 to $5.85, an increase from the previous forecast of $5.56 to $5.64.
Needham analysts have upgraded Lululemon stock from Hold to Buy, setting a price target of $475, citing strong recovery of demand. Meanwhile, BofA Securities raised the price target on Lululemon's shares to $480 from $420, while maintaining a Buy rating. Stifel has also maintained their Buy rating on Lululemon, reaffirming the $438 price target. Truist Securities sustained their Buy rating and set a price target of $460.
These recent developments come on the back of a successful holiday season for Lululemon, with collaborations with Disney (NYSE:DIS) and the National Hockey League contributing to strong sales. The company's financial numbers are pointing upward, indicating a positive trajectory for the athletic apparel retailer.
These are the latest updates in a series of positive adjustments from various analysts following strong holiday results and increased revenue expectations for the fourth quarter.
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