On Monday, Bernstein analysts, led by Aneesha Sherman, reaffirmed their Outperform rating and $460.00 price target on Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU). The firm defended its bullish stance, citing expected positive inflection in the Americas business and continued strong growth in China. This optimism is supported by InvestingPro data showing 23 analysts revising their earnings estimates upward, with the company maintaining impressive gross profit margins of 58.85%. Sherman noted that after six quarters of growth deceleration, Lululemon is poised for a rebound due to factors such as a more positive higher-income consumer base, a stronger product assortment, and relatively weak comparative figures from the previous year.
The analysts observed early signs of an improved product assortment and anticipate traffic trends to improve with new product launches this spring. Bernstein's upgrade earlier this month sparked debate, but the firm has addressed the concerns raised by providing detailed analysis and rationale for their positive outlook on the company. The company's strong financial position is reflected in its "GREAT" financial health score on InvestingPro, with robust return on equity of 46%.
In terms of Lululemon's prospects in China, Bernstein is bullish on the expectation of over 20% growth. The analysts believe that Lululemon's low market share and premium focus in China make it less susceptible to macroeconomic risks. Data indicates significant gains in brand awareness and preference in the past year, which, coupled with strong store growth, should sustain the company's growth rate above 20%. This expansion potential adds to the company's already impressive revenue growth of 10.84% over the last twelve months.
Following Lululemon's recent guidance raise, Bernstein also increased their FY24 earnings per share (EPS) estimate to $5.88, up 21 cents, and their FY25 estimate to $16, an increase of 3 cents. The firm maintains a bullish view on Lululemon, supporting the stock's strong performance potential. Trading at a P/E ratio of 28.72, InvestingPro analysis suggests the stock is currently undervalued relative to its growth prospects, with additional insights available in the comprehensive Pro Research Report covering this top athletic wear retailer.
In other recent news, Lululemon Athletica Inc. has seen substantial developments, with several firms maintaining a positive outlook on the company's stock. TD Cowen maintains a buy rating, with a target of $445, viewing the consensus earnings per share (EPS) estimate for fiscal year 2025 of $15.33 as conservative. Evercore ISI has raised Lululemon's stock target to $440, and Bernstein analysts maintained an Outperform rating with a price target of $460.
Lululemon's Q4 sales guidance has been updated to a range of $3.56 billion to $3.58 billion, indicating an 11% to 12% year-over-year increase. The company's management expressed satisfaction with the holiday season's performance across all product categories and regions. The company also anticipates better-than-expected gross margin expansion for the fourth quarter, forecasting a 30 basis point increase.
Needham analysts reiterated a Buy rating and a $475.00 price target for Lululemon Athletica Inc. following Lululemon's raised guidance at the ICR conference. In addition, BofA Securities analyst Lorraine Hutchinson increased the price target for Lululemon Athletica Inc. shares to $480 from the previous $420 while maintaining a Buy rating on the stock. These recent developments follow strong holiday results and increased revenue expectations for the fourth quarter.
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