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Investing.com - JPMorgan has lowered its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $191 from $224 while maintaining a Neutral rating following the company’s second-quarter earnings report and reduced full-year guidance. According to InvestingPro data, 12 analysts have recently revised their earnings expectations downward, with the stock currently trading at a P/E ratio of 13.9x.
The athletic apparel retailer reported second-quarter earnings per share of $3.10, exceeding analyst expectations of $2.87, with revenue growing 7% year-over-year. However, same-store sales increased only 1% on a constant currency basis, below the 2.4% analysts had projected, with Americas comps declining 3% despite higher-than-planned markdowns. The company maintains impressive gross profit margins of 59.1%, as revealed in InvestingPro’s detailed financial analysis.
Lululemon significantly reduced its fiscal 2025 earnings guidance to $12.77-$12.97 per share, approximately 12% below its previous outlook of $14.58-$14.78. The company now expects annual revenue growth of just 2-4%, down from its earlier projection of 5-7%, and anticipates operating margins to decline 390 basis points to 19.8%. Despite these challenges, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
For the third quarter, Lululemon forecasts earnings per share of $2.18-$2.23, about 24% below consensus estimates of $2.89, based on 3-4% revenue growth and operating margins declining 560 basis points year-over-year to 14.9%.
The fourth quarter outlook implies earnings per share of $4.89-$5.04, approximately 17% below analyst expectations of $5.98, with a projected 2.5% revenue decline and operating margins contracting 550 basis points year-over-year to approximately 23.4%.
In other recent news, Lululemon Athletica Inc. reported disappointing second-quarter earnings, which have led several analysts to adjust their outlook on the company. Wells Fargo described the results as "much worse than feared" and lowered its price target to $160, maintaining an Equal Weight rating. BTIG also reduced its price target to $303, attributing the downgrade to weak U.S. sales and insufficient product enhancements. Telsey Advisory Group downgraded Lululemon from Outperform to Market Perform, citing product challenges and tariff headwinds, and cut its price target significantly to $200. UBS followed suit by lowering its price target to $185, citing fundamental trends that suggest a need for Lululemon to revamp its operating model. Evercore ISI also downgraded the stock from Outperform to In Line, reducing its price target to $180 due to slowing growth and tariff concerns. The company experienced flat year-over-year sales in the U.S. market, while growth in Canada decelerated significantly in the second quarter. These developments indicate that Lululemon is facing multiple challenges that have impacted its financial performance and market expectations.
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