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On Wednesday, TD Cowen expressed confidence in Lululemon Athletica Inc. (NASDAQ:LULU), maintaining a Buy rating and a $445.00 price target on the company’s shares. The firm’s analyst highlighted a combination of a more attractive valuation and improved comparative sales in the Americas looking into the fiscal year 2025 estimates (FY25E). Currently trading at $339.57, LULU maintains impressive gross profit margins of 59% and trades at a P/E ratio of 24.4x, which InvestingPro analysis suggests is attractive relative to its growth potential.
The analyst’s remarks suggested that despite the challenges faced by the sector during the earnings season, Lululemon’s management is expected to provide conservative yet achievable guidance for FY25E that would be slightly below the sell-side consensus. TD Cowen’s estimates for the company’s earnings per share (EPS) are modestly above the consensus. With a strong financial health score rated as "GREAT" by InvestingPro and a healthy current ratio of 2.0, the company appears well-positioned to deliver on its guidance.
The forecast for the first quarter’s revenue and EPS might be seen as ambitious against the current backdrop. Nevertheless, the firm reiterated its $445 price target for Lululemon’s stock. This target is based on a 26 times multiple of the estimated EPS for FY26E and 15 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). Discover more valuable insights about LULU and access comprehensive analysis of 1,400+ stocks with InvestingPro’s exclusive research reports.
According to the analysis, given Lululemon’s current market capitalization of $41.2 billion, the company has the potential to buy back more than 20% of its shares within four years while still maintaining $1.6 billion in net cash on its balance sheet. TD Cowen projects an 11% compound annual growth rate (CAGR) for the company’s EPS into FY27E. The options market is currently implying a 9% move in Lululemon’s stock price, while the broader analyst consensus suggests a potential 22% upside from current levels.
In other recent news, Lululemon Athletica Inc. is gearing up for its upcoming earnings report, with analysts offering varied perspectives on the company’s outlook. Piper Sandler maintains an Overweight rating with a price target of $420, citing a significant year-over-year increase in February sales and positive consumer response to new product launches. Similarly, Raymond (NSE:RYMD) James holds an Outperform rating, expressing confidence that Lululemon’s results and fiscal year 2025 guidance will meet or exceed market expectations. In contrast, Jefferies maintains an Underperform rating with a $220 target, expressing concerns about potential merchandise issues affecting U.S. sales. Morgan Stanley (NYSE:MS) has adjusted its price target to $411 while maintaining an Overweight rating, anticipating potential earnings upside but cautioning about conservative guidance due to market uncertainties. Needham has also lowered its price target to $430 but continues to recommend a Buy rating, highlighting optimism ahead of the earnings release. These recent developments reflect a mix of optimism and caution among analysts as Lululemon prepares to disclose its financial performance.
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