On Friday, Truist Securities adjusted its outlook on Lululemon Athletica Inc. (NASDAQ:LULU), reducing the share price target to $498 from the previous $561. The firm sustained a Buy rating on the stock, despite acknowledging a slower growth forecast presented by the company for the year ahead.
The athletic apparel retailer reported a robust fourth quarter that surpassed expectations, yet its forward-looking statement for the fiscal year 2024 revealed a growth projection of 11%-12%, which fell short of the anticipated 14%.
This revised estimate was a result of decelerating trends in the U.S. market within a difficult business climate. Consequently, Lululemon shares experienced a decline of approximately 12% after market close.
Truist Securities highlighted two main concerns for investors: the company's full-year 2024 revenue growth forecast not meeting prior expectations, and the even lower revenue growth prediction of 9%-10% for the first quarter, suggesting a fiscal year that leans heavily towards stronger performance in later quarters.
Despite these challenges, Truist Securities remains optimistic about Lululemon's performance, considering the company's outlook to be on the conservative side and anticipating potential upward revisions and earnings beats throughout the year. The firm's stance is to continue recommending purchase of Lululemon shares, particularly during periods of market weakness.
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