Fiserv earnings missed by $0.61, revenue fell short of estimates
Investing.com - Baird downgraded Lululemon Athletica Inc. (NASDAQ:LULU) from Outperform to Neutral on Tuesday, while reducing its price target to $195.00 from $225.00. The stock, which has declined over 46% in the past six months, currently trades at $173.41. According to InvestingPro data, 23 analysts have recently revised their earnings expectations downward.
The research firm cited "low near-term confidence in the growth and margin trajectory" as the primary reason for the downgrade. Baird had previously indicated reduced confidence following its second fiscal quarter checks. Despite these concerns, InvestingPro data shows LULU maintains impressive gross profit margins of 59.1%.
The downgrade follows what Baird described as a "disappointing" second quarter report from the athletic apparel retailer, which prompted the firm to sharply reduce its estimates for the company.
Baird noted that the "higher degree of earnings uncertainty will overshadow compelling valuation multiples in the near term," making it difficult to recommend shares to investors at this time.
Despite the downgrade, the research firm stated it continues to see "good long-term value in the brand/stock at current levels" but prefers to wait until it has "more conviction that the negative earnings revision cycle has run its course." Trading at a P/E ratio of 11.77, InvestingPro analysis suggests the stock is currently undervalued, with multiple additional insights available in the comprehensive Pro Research Report.
In other recent news, Lululemon Athletica Inc. reported second-quarter earnings with a normalized earnings per share of $3.10, slightly down from the previous year but surpassing consensus estimates by $0.24. However, the company’s revenue of $2.53 billion fell short of expectations by $15 million. Following these results, several financial firms adjusted their outlooks on the company. BofA Securities lowered its price target for Lululemon to $185, citing slower growth in China and improved tariff mitigation. Rothschild Redburn also reduced its price target to $160, pointing to challenges in North America and tariff impacts. KeyBanc Capital Markets downgraded Lululemon from Overweight to Sector Weight due to weak U.S. growth. CFRA adjusted its price target to $270, maintaining a Strong Buy rating despite product issues and tariff concerns. Truist Securities downgraded the stock to Hold and reduced its price target to $170, expressing concerns over disappointing second-quarter results. These developments reflect a cautious outlook from analysts on Lululemon’s future performance amidst various challenges.
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