Trump announces trade deal with EU following months of negotiations
On Friday, Stifel analysts reduced the price target for Lululemon Athletica Inc. (NASDAQ:LULU) stock to $324 from $353, while maintaining a Buy rating. The decision comes as the company faces a slow start to 2025 in international markets. According to InvestingPro data, Lululemon maintains impressive financial health with a current ratio of 2.16 and holds more cash than debt on its balance sheet.
Lululemon’s recent financial results showed revenue of $2.371 billion and earnings per share (EPS) of $2.60, surpassing Stifel’s expectations of $2.364 billion and $2.59 EPS, as well as the broader market estimates of $2.358 billion and $2.58 EPS. Despite reaffirming its fiscal year 2025 revenue guidance, Lululemon lowered its EPS guidance range to $14.58-$14.78, down from the previous $14.95-$15.15, due to tariff impacts expected to affect the second quarter of 2025. The company maintains strong profitability with an impressive 59.22% gross margin. For deeper insights into Lululemon’s financial health and additional ProTips, visit InvestingPro.
International sales comparisons showed significant deceleration, with Greater China reporting an 8% growth in constant currency, down from 27% in the fourth quarter of 2024, and the Rest of the World seeing a 7% increase compared to 17% in the previous quarter. The analysts continue to focus on the potential for growth in the U.S. women’s segment and the execution of international brand opportunities.
Stifel remains optimistic about Lululemon’s brand value and category creator positioning, despite acknowledging the risks in accelerating international sales. The new price target reflects a 20 times price-to-earnings ratio on the expected calendar year 2026 EPS of $16.20. Currently trading at a P/E ratio of 22.62x with a market capitalization of $39.74 billion, InvestingPro analysis suggests the stock is slightly undervalued based on its Fair Value model.
In other recent news, Lululemon Athletica Inc. reported a slight beat in both revenue and earnings for the first quarter, but lowered its full-year earnings per share guidance, marking a first since 2014. The company maintained its revenue guidance for the year, despite challenges in certain markets, such as a significant deceleration in China and international sales. Lululemon’s second-quarter projections align with consensus estimates, but concerns about tariffs and investments impacting margins persist. Analysts have adjusted their price targets for Lululemon, with BMO Capital setting it at $250, Citi at $270, Evercore ISI at $320, KeyBanc at $350, and Jefferies at $200. These adjustments come amid mixed first-quarter results and concerns over weak sales trends in the United States. Analysts have expressed differing levels of confidence in Lululemon’s strategic initiatives and innovation strategy. The company faces rising inventory levels and increased selling, general, and administrative expenses, which could pressure margins. Despite these challenges, some analysts remain optimistic about Lululemon’s ability to maintain its premium positioning and drive growth through new product offerings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.