On Friday, BofA Securities updated its outlook on Lululemon Athletica Inc. (NASDAQ:LULU), reducing the price target to $530 from the previous $540 while maintaining a Buy rating on the stock.
The adjustment comes as the company experiences a slower start to the first quarter in the U.S. market, attributed to macroeconomic pressures and inventory shortages in popular colors and smaller sizes.
The firm's analyst noted that despite the slower beginning, Lululemon's strong innovation pipeline is expected to drive significant market share gains and robust earnings growth. The brand, which has been increasingly attracting a younger demographic, is actively addressing product shortages as new color options begin to hit the stores.
In light of the quarter-to-date performance, Lululemon's management has set first-quarter and full-year 2024 guidance figures that fall below the company's long-term growth algorithm. BofA Securities believes the provided forecasts might be on the conservative side if the incoming product deliveries continue to see positive customer response.
Reflecting the softer start of the year, the analyst has also revised the full-year 2024 earnings per share estimate downwards by 2%, now standing at $14.06. Despite the reduced price target of $530, this still represents a valuation of 20 times the fiscal year 2025 estimated enterprise value to EBITDA.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.