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Most Analysts Raising Targets On Lululemon Following Q4 Results

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Most Analysts Raising Targets On Lululemon Following Q4 Results

Many Street analysts have raised the price target on Lululemon Athletica inc. (NASDAQ: LULU) shares following strong fourth quarter results, which topped Street's view.

The apparel retailer reported earnings of $0.85 per share, $0.05 above the Street's consensus. Revenue of $704.28 million also came in ahead of expectations for $692.21 million.

Lindsay Drucker Mann of Goldman Sachs, who has a Sell rating on the stock, raised target price on shares to $48 from $43.

"While we continue to believe it will be much tougher for LULU to comp in 2H and that increased competition in women's athletic apparel will cap store productivity and margins longer-term, the 4Q results suggest near-term execution on inventory and price increases is carrying the business better than we had expected," the analyst noted.

Mann, however, said competitive dynamics and the markdown risk in Lululemon's store model, plus the complexity of international expansion, leave her more cautious.

Related Link: Near-Term Execution On Inventory, Price Increases Carrying Lululemon, To Goldman's Surprise

Meanwhile, SunTrust's Pamela Quintiliano raised the target price to $79 from $66, saying "inventory controls, solid execution, better assortments, men's, ivviva, int'l and larger format domestic locations as drivers of LT upside."

"In our view, goal of doubling sales and more than doubling of EPS by 2020 is achievable," said Quintiliano who has a Buy rating.

Michael Binetti of UBS increased the Lululemon price target by $9 to $69, saying "We're impressed that LULU achieved a SSS & EPS beat while simultaneously beating GM's and clearing inventories a quarter early. The 4Q15 conf call went a long way to building confidence in LULU."

"That said, we'd be more concerned if the IQ traffic deceleration was because LULU had completely cleared the 1/3 of excess inventory that it defined as "needs a discount" in 4Q, and then traffic slowed rapidly after discounts stopped."

Binetti has a Neutral rating on Lululemon.

In addition, Andrew Burns of D. A. Davidson maintained his Neutral rating and increased the price target shares to $70 from $62, saying "while near term execution has improved, we look to get more positive on shares with increased confidence that forecasted earnings growth is sustainable."

Latest Ratings for LULU

DateFirmActionFromTo
Jan 2021Morgan StanleyMaintainsEqual-Weight
Dec 2020Morgan StanleyMaintainsEqual-Weight
Dec 2020Raymond JamesMaintainsStrong Buy

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