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On Friday, BMO Capital analysts adjusted their outlook for Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU) by reducing the stock’s price target to $250 from $302. The analysts maintained a Market Perform rating for the stock. According to InvestingPro analysis, the company maintains a "GREAT" financial health score, with the stock currently trading at a P/E ratio of 22.6x.
Lululemon recently reported a slight beat in both top- and bottom-line figures. The company saw better gross margins, maintaining an impressive 59.2% gross profit margin, with revenue growing at 10.1% year-over-year. However, this was partially offset by a miss in selling, general, and administrative expenses. Management provided guidance for the second quarter that was significantly below expectations.
For the full fiscal year, Lululemon kept its revenue guidance unchanged but lowered its expectations for gross margin and earnings per share. This marks the first time since fiscal year 2014 that the company has reduced its full-year EPS forecast at the first-quarter announcement. For deeper insights into Lululemon’s financial health and growth prospects, check out the comprehensive Pro Research Report available on InvestingPro.
BMO Capital expressed concerns about Lululemon’s long-term domestic revenue potential, describing the brand as strong but overstretched. Despite these concerns, the company maintains strong liquidity with a current ratio of 2.16. The new price target reflects a valuation of approximately 16 times the company’s expected fiscal year 2026 earnings.
In other recent news, Lululemon Athletica Inc. reported mixed results for its first quarter, with a slight revenue increase of 7% year-over-year. Despite achieving its revenue target, the company’s earnings per share guidance was lowered due to challenges from tariffs and rising inventory levels. Analysts from Citi, Evercore ISI, KeyBanc, Jefferies, and Piper Sandler have all adjusted their price targets for Lululemon, citing various concerns including weak U.S. trends and deceleration in international sales, particularly in China. Citi lowered its price target to $270, while maintaining a Neutral rating, due to disappointing sales figures. Evercore ISI reduced its target to $320 but retained an Outperform rating, expressing confidence in Lululemon’s innovation strategy. KeyBanc adjusted their target to $350, maintaining an Overweight rating, and expressed optimism about the company’s strategic initiatives. Jefferies cut its target to $200 with an Underperform rating, highlighting challenges in the U.S. market and rising costs. Piper Sandler also lowered its target to $270, maintaining a Neutral rating, due to sales concerns and tariff impacts. These recent developments reflect ongoing challenges and strategic adjustments for Lululemon in the current economic climate.
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