106%+ returns, 97% win rate: A fresh list of AI-picked stock is out NOW
On Wednesday, Truist Securities adjusted its outlook on Lululemon Athletica Inc. (NASDAQ:LULU), reducing the price target to $297 from the previous $380, yet reaffirming a Buy rating for the company's shares. The adjustment by Truist Securities comes amidst concerns over the impact of tariffs on the apparel industry, which has been experiencing significant volatility. According to InvestingPro data, the stock has declined over 35% year-to-date, though analysis suggests the company remains undervalued at current levels.
Truist Securities' analyst observed that despite the challenges posed by tariffs, Lululemon continues to exhibit strong brand momentum. The firm highlighted that while the broader footwear and apparel sector is grappling with tariff-induced headwinds, Lululemon is positioned to surpass the softer top-line expectations that have been set for the industry. The company's guidance for the first quarter indicates no acceleration in the U.S. market, notwithstanding positive trends observed in Truist’s card data, TikTok engagement, and Google (NASDAQ:GOOGL) Trends.
The decision to lower the price target reflects Truist Securities' anticipation of the potential difficulties and uncertainties tariffs may present in the near future. The analyst believes that the downward trend in Lululemon's share prices already factors in the anticipated challenges.
The analysis by Truist Securities suggests that Lululemon’s solid brand presence and consumer engagement across various platforms could help the company navigate through the current economic landscape. Despite the reduction in the price target, Truist Securities' continued endorsement of a Buy rating indicates a belief in Lululemon's resilience and ability to weather the tariff storm.
In other recent news, Lululemon Athletica Inc. reported strong fourth-quarter earnings, with normalized EPS of $6.14, exceeding consensus estimates by $0.27, and revenue reaching $3.68 billion, surpassing expectations by $30 million. Despite this positive performance, BMO Capital Markets lowered its price target for Lululemon to $302, citing concerns over the company's first-quarter guidance and long-term growth challenges in the domestic and women's segments. Meanwhile, CFRA upgraded Lululemon's stock rating to Strong Buy with a price target of $376, highlighting the attractive entry point for investors following the company's robust earnings report. Argus analysts, however, downgraded Lululemon from Buy to Hold, pointing to growth concerns related to an aging product line and competitive pressures from other brands. Bernstein also adjusted its price target downward to $405, maintaining an Outperform rating but acknowledging macroeconomic pressures affecting Lululemon's recovery momentum.
TD Cowen reaffirmed a Buy rating with a $445 price target, noting Lululemon's record-high gross margins and potential for top-line growth. The firm's analysis suggests that Lululemon's management could repurchase over 20% of the company's capitalization within four years. Lululemon's guidance indicates a revenue increase of 6% to 7% for the fiscal year, with EPS projections ranging from $14.95 to $15.15. These recent developments reflect a mixed outlook for Lululemon, with varying analyst opinions on its future performance amid economic uncertainties and competitive challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.