Wall Street Likes What It Sees At Lululemon

Lululemon Athletica inc. LULU on Thursday released its fourth quarter earnings report that beat analyst expectations. Revenue increased to $602.5 million from $521 million in the previous quarter and EPS was $0.78, beating the consensus estimates of $0.73.

"2014 was a critical year when we strengthened our leadership team and made important investments in our product pipeline, guest experience, brand, and community engagement," said CEO Laurent Potdevin in a statement. "In 2015, we expect to substantially complete this foundational work and accelerate our investments in innovation to drive sustainable global growth as we continue to lead the market that we created."

Shares traded recently at $64.31, up 0.6 percent on the day.

Several Wall Street firms gave their thoughts on the Lululemon.

Canaccord Genuity: Hold, $55 price target

"LULU has clearly brought stability back to the business, and for that we credit management with their efforts over the past year….While we acknowledge parts of the business are performing well (women's pants, mens, Ivivva), we are not yet ready to credit LULU with having fully recovered its luster. Moreover, 2015 is another investment year in which both gross margin and SG&A deleverage will compress EPS growth to ~1 percent."

Barclays: Overweight, $85 price target

"We remain buyers of LULU and see potential upside to current guidance, particularly comps, as redesigned tanks/bottoms rollout to stores later this year. All in, we believe the quarter helped to assuage the LT margin conversation and allow for greater focus on the numerous growth initiatives unique to the LULU story."

Oppenheimer: Outperform, $70 price target

"After challenging 2013/1H14, top-line/bottom-line momentum at LULU is accelerating, with 4Q14 8 percent comps driven by traffic inflection, with every region improving (US +~10 percent, Canada flatter than -LSD/MSD comps last 2 years). While port delays/ weather pressuring 1Q15 guidance, "underlying demand" QTD consistent with holiday--and trends should improve from here as spring receipts come in... LULU's earnings growth trajectory is set to accelerate, with 20 percent EPS growth sustainable longer term."

Wedbush: Outperform, $76 price target

"Our takeaways from the 4Q EPS call are generally positive, including (1) continued momentum in the underlying comp trend into 1Q, excluding port delays/weather, (2) expectations for merchandise margin to trend at least flat in 1Q15 (after declines throughout 2014), and (3) guidance that appears relatively conservative, with external factors now fully baked in...On the product side, we see particular opportunity for improvement in the tops business (including an improved tank wall in 2Q15) and expect continued strength in men's (+16 percent SSS during 4Q14)."

Morgan Stanley: Equal-weight, $56 price target

"We believe LULU guided the $13M expected sales impact due to realization early in 1Q of slower trends (weather and West Coast ports related) rather than anticipation of future impact. In 4Q LULU guided an expected $10M West Coast Ports impact on its 12/11 earnings call, then at ICR indicated airfreighting would allow product to reach stores and the company upward revised guidance. However, in today's scenario, management commentary suggests the sales drag already occurred early in 1Q. Interestingly, when we add back the $13M hit to the top end of $413-$418M guidance(arriving at $431M), guidance still falls $3.7M below our prior 1Q estimate (and we were below consensus). This suggests that even after accounting for these one-time impacts, sales trends were just shy of expectations."