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On Friday, Truist Securities analysts adjusted their outlook on Lululemon Athletica Inc. (NASDAQ:LULU), reducing the price target to $290 from $297. Despite maintaining a Buy rating, the analysts cited a weaker-than-expected second-quarter outlook and a reduction in the fiscal year 2025 guidance as key factors influencing the decision. The company, currently valued at nearly $40 billion, trades at a P/E ratio of 22.6x, reflecting market concerns about its near-term outlook.
Lululemon’s second-quarter forecast fell short of expectations, and the company revised its full-year guidance downward. The adjustment is attributed primarily to tariff impacts and increased markdown pressure. These challenges have contributed to a decline in Lululemon shares, which fell over 22% after market close. According to InvestingPro data, the company maintains strong financial health with impressive gross profit margins of 59% and a healthy current ratio of 2.16, indicating solid operational efficiency despite current headwinds.
The analysts noted that while Lululemon is experiencing positive feedback on its new product lines, this has not significantly impacted comparable sales amid challenging macroeconomic conditions. The stock’s current valuation is approximately 17.5 times earnings, which the analysts believe could provide support against further declines.
Despite the recent setbacks, Truist Securities sees potential growth opportunities for Lululemon as it expands its popular product offerings in the upcoming fall season. The firm remains optimistic about the company’s long-term prospects, maintaining a Buy rating on the stock. This optimism is supported by the company’s consistent revenue growth of 10% over the last twelve months and seven analysts revising their earnings expectations upward for the upcoming period.
In other recent news, Lululemon Athletica Inc. reported first-quarter earnings per share (EPS) of $2.60, exceeding expectations. Revenue for the quarter reached $2.371 billion, surpassing market estimates. Despite these strong results, the company has revised its EPS forecast for fiscal year 2025 to a range of $14.58 to $14.78, down from previous estimates, due to anticipated tariff impacts and a more promotional market environment. Analysts from UBS, BTIG, Needham, BofA Securities, and Stifel have all adjusted their price targets for Lululemon, citing challenges such as increased tariffs and international sales slowdowns. UBS lowered its price target to $290 while maintaining a Neutral rating, and BTIG reduced its target to $405, keeping a Buy rating. Needham also lowered its target to $317, and BofA Securities adjusted its target to $370, both maintaining Buy ratings. Stifel set a new price target of $324, reflecting concerns over international market performance. Despite these challenges, Lululemon’s management remains focused on new product launches and strategic pricing to mitigate tariff effects.
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