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On Friday, Bernstein SocGen Group analysts reiterated their Outperform rating on Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU) stock, maintaining a price target of $350.00. According to InvestingPro data, the company appears undervalued at its current price of $264.58. This decision follows the company’s recent first-quarter report, which raised ongoing concerns about the company’s growth prospects in the United States and the potential for China to drive growth.
The analysts expressed doubts regarding Lululemon’s ability to achieve positive comparable sales in the U.S. and questioned whether growth in China would be sufficient to offset domestic challenges. The company maintains impressive gross profit margins of 59.2% and achieved 10.1% revenue growth in the last twelve months. Despite these concerns, they continue to support the company’s medium-term growth strategy, which includes leveraging steady growth in China and margin improvements to drive long-term earnings per share growth.
The report highlighted that while the medium-term growth outlook remains positive, the short-term view is more cautious. Analysts indicated that the U.S. market’s growth challenges might persist for another quarter, and they are waiting for signs of improvement in U.S. growth and strengthening of comparable sales in China.
Bernstein SocGen Group analysts emphasized their confidence in Lululemon’s long-term potential, maintaining the price target at $350, which is based on a 20.5x multiple of the company’s projected fiscal year 2026 earnings per share. They noted that the company’s growth algorithm remains attractive, with China providing a margin tailwind to balance the mature U.S. market.
The analysts’ report reflects a balanced perspective, acknowledging the challenges in the U.S. market while maintaining optimism about Lululemon’s potential for growth in China and overall long-term strategy.
In other recent news, Lululemon Athletica Inc. has faced a series of adjustments in its financial outlook and stock price targets from various analysts. The company recently revised its earnings guidance downward, affecting its stock performance. TD Cowen lowered its price target to $321, citing a 2.5% cut in earnings per share (EPS) guidance and concerns over international operations. Truist Securities also adjusted its target to $290 due to a weaker-than-expected second-quarter outlook and increased markdown pressures. UBS maintained a Neutral rating while reducing its price target to $290, noting consistent U.S. sales and significant growth in China Mainland sales.
BTIG adjusted their price target to $405, focusing on the impact of increased tariffs and a cautious outlook for the second quarter. Needham analysts lowered their target to $317 following what they described as lackluster first-quarter results, despite the EPS surpassing guidance. Lululemon’s first-quarter EPS was reported at $2.60, exceeding the projected range, with a 1% growth in comparable sales. Analysts have expressed concerns over tariff impacts, sluggish domestic business, and international growth slowdowns. Despite these challenges, several analysts maintain a Buy rating, highlighting potential growth opportunities and the company’s focus on new product performance.
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