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On Friday, BofA Securities analysts lowered the price target for Lululemon Athletica Inc. (NASDAQ:LULU) stock to $370 from $400, while maintaining a Buy rating. The adjustment comes as the company navigates challenges related to tariffs and a more promotional market outlook. According to InvestingPro data, the company maintains impressive gross profit margins of 59.2% and currently trades at a P/E ratio of 22.6x.
The analysts noted that Lululemon’s management has kept its fiscal 2025 sales guidance steady but reduced its earnings per share (EPS) forecast by 2.5% to a range of $14.58 to $14.78. This revision reflects the impact of tariffs and a slightly more promotional environment. The company’s second-quarter guidance of $2.85 to $2.90 was below the consensus expectation of $3.28, primarily due to tariffs and timing of selling, general, and administrative expenses. Despite these challenges, InvestingPro reports that 7 analysts have recently revised their earnings upwards for the upcoming period, suggesting confidence in the company’s outlook. Get access to 8 more exclusive InvestingPro Tips and comprehensive analysis in the Pro Research Report.
Despite these challenges, BofA Securities remains positive on Lululemon’s sales plans, which are reportedly on track. The analysts are encouraged by successful product launches in the first half of the year, which are expected to scale in the latter half. Management plans to strategically and modestly increase prices on a small portion of its product range and pursue sourcing efficiency measures.
Tariffs are anticipated to be a 40 basis point headwind for fiscal 2025, with a 60 basis point impact in the second quarter. The company expects mitigation efforts to begin in the second half of the year. Although markdowns in the first quarter were modestly lower, management has included some caution in its outlook due to slowing traffic trends and macroeconomic uncertainty.
In other recent news, Lululemon Athletica Inc. reported financial results that showed revenue of $2.371 billion and earnings per share (EPS) of $2.60, surpassing expectations from both Stifel and the broader market. However, the company lowered its full-year EPS guidance due to anticipated tariff impacts. Despite maintaining its fiscal year 2025 revenue guidance, Lululemon’s guidance for the second quarter fell below expectations. Analysts from Stifel, BMO Capital, Citi, Evercore ISI, and KeyBanc have all adjusted their price targets for the company, reflecting various concerns about international sales and future growth potential. Stifel lowered its price target to $324, while BMO Capital set it at $250, citing concerns about domestic revenue potential. Citi reduced its target to $270, noting weak sales performance, particularly in China. Evercore ISI and KeyBanc adjusted their targets to $320 and $350, respectively, while maintaining positive outlooks on Lululemon’s innovation strategy and strategic initiatives. Despite these adjustments, analysts remain focused on Lululemon’s ability to navigate challenges and capitalize on growth opportunities.
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