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On Friday, Evercore ISI analysts adjusted their outlook for Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU), reducing the price target to $320 from a previous $400. Despite the lowered target, the analysts maintained an Outperform rating for the stock. According to InvestingPro data, analyst targets currently range from $194 to $500, with 7 analysts recently revising their earnings expectations upward for the upcoming period.
The adjustment comes after Lululemon’s first-quarter update, which, according to Evercore ISI, was not as negative as the market’s initial reaction suggested. Lululemon achieved its revenue target for the first quarter and kept its annual forecast intact. The company’s impressive gross profit margin of 59.22% and overall "GREAT" financial health score from InvestingPro support this positive outlook. The company also noted expectations for a significant increase in revenue from China, projecting a growth of 25-30% in the second quarter, up from 21% in the first quarter.
The analysts highlighted a sharp market reaction, with Lululemon’s stock reflecting a 20% decline in response to a 2% earnings per share reduction. This reduction was largely attributed to industry-wide tariffs, which the company anticipates offsetting by January.
Despite the first-quarter results, Evercore ISI expressed confidence in Lululemon’s innovation strategy, which is expected to enhance U.S. comparable sales as new products reach broader distribution in the coming months. Trading at a P/E ratio of 22.62, InvestingPro’s Fair Value analysis suggests the stock is slightly undervalued at current levels. The stock’s potential for value creation is further supported by its strong financial metrics, with detailed insights available in InvestingPro’s comprehensive research report, one of 1,400+ deep-dive analyses available to subscribers.
In other recent news, Lululemon Athletica Inc. reported a 7% year-over-year increase in revenue for the first quarter, with earnings per share (EPS) reaching $2.60. Despite the revenue growth, the company adjusted its full-year 2025 EPS guidance downward. Analysts from KeyBanc, Jefferies, Piper Sandler, and Goldman Sachs have all made adjustments to their price targets for Lululemon, reflecting mixed sentiments about the company’s future performance. KeyBanc lowered its price target to $350 while maintaining an Overweight rating, citing confidence in Lululemon’s strategic initiatives. Jefferies reduced its target to $200 and maintained an Underperform rating, expressing concerns over weak U.S. trends and rising costs. Piper Sandler adjusted its target to $270, noting sales concerns and tariff impacts, while Goldman Sachs set its target at $285, highlighting weaker trends in key markets. The company is navigating challenges such as slowing mall traffic in the U.S. and decelerating international sales, particularly in China. Analysts have noted potential growth opportunities through new product lines and pricing strategies, but uncertainties remain due to external economic factors and competition.
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