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On Friday, TD Cowen analysts adjusted their outlook for Lululemon Athletica Inc. (NASDAQ:LULU) by lowering the price target to $321 from $373, while maintaining a Buy rating. The revision follows a recent earnings guidance cut by the company, which has impacted its stock performance. According to InvestingPro data, Lululemon maintains a "GREAT" financial health score, with impressive gross profit margins of 59% and strong revenue growth of 10% over the last twelve months.
The analysts noted that Lululemon shares have declined by 20% after the company reduced its earnings per share (EPS) guidance by 2.5%. They described this reaction as extreme and highlighted the challenging earnings season influenced by tariff impacts and increased macroeconomic commentary. InvestingPro analysis suggests the stock is currently trading below its Fair Value, with multiple ProTips highlighting the company’s strong fundamentals and balance sheet strength.
Lululemon’s shares are currently trading at a valuation of 16 times the firm’s fiscal year 2026 estimated EPS and 9 times its enterprise value to EBITDA, which is comparable to the stock’s lows in August 2024. The new price target reflects a valuation of 20 times the fiscal year 2026 estimated EPS and 11 times EV/EBITDA.
The report also mentioned that the mitigated tariff impact of 40 to 60 basis points was in line with the firm’s estimates. However, concerns were raised about a potential slowdown in Lululemon’s international operations. The fiscal year 2025 EPS estimate was revised down to $14.77 from $15.15, and the fiscal year 2026 EPS estimate was adjusted to $16.05 from $16.56, slightly below the current consensus.
In other recent news, Lululemon Athletica Inc. has faced several adjustments in its financial outlook and stock price targets from various analyst firms. The company reported a weaker-than-expected second-quarter forecast and revised its full-year guidance downward due to tariff impacts and increased markdown pressure. Truist Securities, UBS, BTIG, Needham, and BofA Securities all lowered their price targets for Lululemon, citing similar concerns. Despite these challenges, Lululemon’s first-quarter earnings per share surpassed expectations, reaching $2.60, although the company reduced its full-year EPS forecast. The company’s management has maintained its fiscal 2025 sales guidance but acknowledged the impact of tariffs and a more promotional market environment on its earnings. Analysts from BTIG and BofA Securities remain optimistic, maintaining a Buy rating, while UBS holds a Neutral rating. Lululemon’s sales in China Mainland showed a positive trend, with a 21% year-over-year increase in the first quarter and expectations for further growth. The company plans to mitigate tariff impacts through strategic price increases and sourcing efficiency measures.
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