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On Friday, Stifel analysts maintained a positive outlook on Lululemon Athletica Inc. (NASDAQ:LULU), reiterating a Buy rating and a price target of $353.00. The firm’s analysts highlighted their expectation for the company’s first-quarter 2025 earnings and full-year guidance to reflect improving trends in the core U.S. women’s segment, as well as growth opportunities internationally. According to InvestingPro data, LULU maintains a "GREAT" financial health score, with the stock currently trading below its Fair Value, suggesting potential upside opportunity. The company has demonstrated solid performance with a 10% revenue growth over the last twelve months.
Stifel anticipates that new product launches in the U.S. are generating increased customer engagement, which should lead to sequentially better top-line trends in the country. This improvement could signal a turning point for comparable sales in the Americas, bolstering confidence in Lululemon’s fundamental business strength. The company’s impressive gross profit margin of 59.2% and strong return on equity of 42% underscore its operational efficiency.
Analysts at Stifel forecast that Lululemon will surpass their above-consensus estimates for the first quarter of fiscal year 2025. They attribute this potential outperformance to enhanced U.S. customer conversion rates, average selling prices, and units per transaction, despite weaker store traffic. Additionally, continued international momentum, particularly in China, is expected to contribute to the company’s success.
Despite the potential impact of tariffs, which Stifel estimates could reduce annual margins by 200 basis points before mitigation efforts, analysts believe that Lululemon will maintain its fiscal year 2025 earnings per share guidance range of $14.95 to $15.15. The firm anticipates that the company’s pricing power will help offset tariff costs. InvestingPro analysis reveals that LULU holds more cash than debt on its balance sheet, with a healthy current ratio of 2.16, providing financial flexibility to navigate potential challenges.
Stifel’s endorsement of Lululemon is based on several factors, including the company’s robust economic model, strong brand, innovative product pipeline, and the potential for international expansion. Moreover, signs of a rebound in the U.S. market add to the firm’s positive stance on the stock. With shares trading at 21 times the price-to-earnings ratio on the lower end of the company’s fiscal year 2025 guidance, Stifel views Lululemon’s stock as undervalued compared to other established active brands. For a deeper understanding of LULU’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which provides detailed analysis of the company’s financial health, valuation metrics, and growth potential among 1,400+ top stocks.
In other recent news, Lululemon Athletica Inc. is preparing to release its first-quarter earnings report, with Citi analysts expecting the company to surpass earnings per share (EPS) expectations. This optimism is driven by stronger-than-anticipated sales in the Americas and China. Meanwhile, BNP Paribas (OTC:BNPQY) Exane has maintained an Underperform rating for Lululemon, citing concerns about declining margins and the company’s pricing strategy, including markdowns on new product lines. Evercore ISI has adjusted its price target for Lululemon to $320, maintaining an Outperform rating, and highlighted the company’s flexible inventory strategy amidst tariff challenges. Piper Sandler also revised its price target to $280, keeping a Neutral rating, and noted potential cost pressures and competitive challenges for the brand. Truist Securities lowered its price target to $297 but reaffirmed a Buy rating, underscoring Lululemon’s strong brand momentum despite tariff-related difficulties. These developments reflect varying analyst perspectives on Lululemon’s financial health and market position.
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