On Monday, Needham analysts reiterated a Buy rating and a $475.00 price target for Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU). The firm's positive stance comes after Lululemon raised its guidance at the ICR conference. Management credited the adjustment to robust customer reception of their product offerings.
Despite the upbeat outlook, Lululemon's stock performance remained relatively flat compared to the S&P 500's approximately 0.5% decline at the time of the announcement.
The company also expects selling, general, and administrative (SG&A) expenses to show a deleverage of 80-90 basis points, an improvement over the previously forecasted 90-100 basis points of deleverage. In light of the updated guidance, Needham has adjusted its FY24-26 EPS forecasts for Lululemon to $14.36, $15.49, and $17.20, respectively.
These figures are an increase from the firm's prior estimates of $14.16, $15.34, and $17.04.The analysts at Needham believe that Lululemon is positioned to become a "story stock" in 2025, suggesting that the company's narrative may drive investor interest as concerns over the U.S. market potentially ease.
InvestingPro subscribers have access to 12 additional key insights about LULU, including detailed valuation metrics and growth indicators. They emphasize that the direction of the company's financial numbers is pointing upward, indicating a positive trajectory for the athletic apparel retailer, which currently maintains a robust return on equity of 46% and healthy current ratio of 2.0.
The company also expects selling, general, and administrative (SG&A) expenses to show a deleverage of 80-90 basis points, an improvement over the previously forecasted 90-100 basis points of deleverage. In light of the updated guidance, Needham has adjusted its FY24-26 EPS forecasts for Lululemon to $14.36, $15.49, and $17.20, respectively. These figures are an increase from the firm's prior estimates of $14.16, $15.34, and $17.04.
The analysts at Needham believe that Lululemon is positioned to become a "story stock" in 2025, suggesting that the company's narrative may drive investor interest as concerns over the U.S. market potentially ease. They emphasize that the direction of the company's financial numbers is pointing upward, indicating a positive trajectory for the athletic apparel retailer.
In other recent news, Lululemon Athletica Inc. has seen positive adjustments from various analysts following strong holiday results and increased revenue expectations for the fourth quarter. BofA Securities, Stifel, and Truist Securities maintained their Buy rating on Lululemon, with BofA raising the stock target by 14% to $480.
This comes after Lululemon reported an impressive 10.8% revenue growth over the last twelve months and a successful holiday season, which included high-performing collaborations with Disney (NYSE:DIS) and the National Hockey League.
Lululemon now anticipates net revenue for the fourth quarter 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. The company also expects a gross margin increase of approximately 30 basis points relative to the fourth quarter of the previous fiscal year.
Needham analysts have upgraded Lululemon stock from Hold to Buy, setting a price target of $475, citing a strong recovery of demand. Meanwhile, Truist Securities raised the price target on Lululemon's shares to $460 from $420, while reiterating a Buy rating, seeing the recent underperformance as an attractive entry point for investors.
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