Market Overview

Lululemon's Q3 Wins Over This Bear

Lululemon's Q3 Wins Over This Bear

Lululemon Athletica inc. (NASDAQ: LULU) reported fiscal third quarter results after the close Wednesday, highlighted by 14 percent top-line growth on the back of 8 percent comps growth. Adjusted earnings per share of 56 cents trumped the consensus estimate of 52 cents per share.

The company raised its revenue, comps, gross margin and adjusted earnings per share guidance for fiscal 2017.

Following the beat-and-raise quarter, Canaccord Genuity altered its bearish stance on Lululemon. 

The Analyst

Canaccord Genuity analyst Camilo Lyon upgraded his rating on the shares of Lululemon Athletica from Sell to Hold and increased his price target from $43 to $70.

The Thesis

Lululemon Athletica's ability to innovate through industry headwinds is demonstrated by its results, and specifically the 24 percent comps it notched in women's pants category, analyst Lyon said in a Thursday note. (See Lyon's track record here.)

The analyst said his earlier Sell rating was predicated on a surging denim cycle, which was expected to take wallet share from a long-in-the-tooth athleisure cycle.

"Moreover, LULU's supply chain-driven gross margin realization story appears to have more chapters to it as evidenced by the 100bps of gross margin expansion in Q3 (vs. flat guidance) and a similar rate of expansion expected in Q4."

Overall, Canaccord Genuity sees the Q3 results as strong, with little to poke at.

The firm raised its 2018 earnings per share estimate to $2.86 and also its valuation multiples. With these two, the stock is already ahead of its new $70 price target, making a Hold rating appropriate, Lyon said. 

The Price Action

Along with the positive reaction to the Q3 report, the stock is up about 13 percent year-to-date.

At the time of writing, Lululemon Athletica shares were rallying 7.92 percent to $73.02.

Related Links:

KeyBanc: 'Solid' Lululemon Q3 Shows E-Commerce Growth

10 Things To Like About Lululemon

Photo courtesy of Lululemon. 

Latest Ratings for LULU

Jan 2020MaintainsNeutral
Jan 2020MaintainsStrong Buy
Jan 2020MaintainsNeutral

View More Analyst Ratings for LULU
View the Latest Analyst Ratings

Posted-In: Athleisure Camiio Lyon Canaccord Genuity lululemonAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (LULU)

View Comments and Join the Discussion!

Latest Ratings

RPAYCantor FitzgeraldMaintains18.0
CMSCredit SuisseDowngrades
PBCTStephens & Co.Maintains15.5
TTECCowen & Co.Initiates Coverage On50.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at