7 Lululemon Athletica Analysts On Q4 Print: 'Demand For LULU's Merchandise Remains Healthy And Strong,' But There May Be A Headwind

Zinger Key Points
  • Lululemon’s inventory is likely to be cleared by the back half of 2023, one analyst says.
  • The company is able to navigate a challenging environment better than most peers, another analyst states.

Shares of Lululemon Athletica Inc LULU made big moves in early trading on Wednesday. The company reported fourth-quarter revenue of $2.77 billion, up 30% year-over-year and higher than Street expectations of $2.70 billion. Lululemon’s adjusted earnings of $4.40 per share also topped the consensus estimate of $4.26 per share.

Morgan Stanley On Lululemon Athletica

Analyst Alex Straton maintained an Overweight rating and price target of $387.

Lululemon’s inventory is still “bloated” but is improving on a sequential basis “with a path to being clean by 2H,” Straton said in a note.

The improvement and resolution of inventory, gross margins and full-year guidance “fuels our belief that recent headwinds prove mostly transitory, & that LULU is a high-quality asset on sale,” he added.

KeyBanc Capital Markets On Lululemon Athletica

Analyst Noah Zatzkin reiterated an Overweight rating while raising the price target from $375 to $390.

“4Q top-line trends (+30% y/y) were strong across channels and geographies,” Zatzkin said.

“Results + guidance reinforce our view that brand strength and product newness, coupled with a broader shift toward the casualization of apparel, are enabling LULU to navigate a challenging environment better than most peers,” he added.

William Blair On Lululemon Athletica

Analyst Sharon Zackfia reaffirmed an Outperform rating on the stock.

“All categories posted double-digit growth once again, with women’s up 30%, men's up 22%, and accessories up 69%,” Zackfia wrote in a note.

“In addition, new customer acquisition remains strong (transactions up nearly 30% for new guests in the fourth quarter), while existing customer repeat rates remain healthy (transactions up over 35% for existing guests in the fourth quarter),” she added.

Check out other analyst stock ratings.

Raymond James On Lululemon Athletica

Analyst Rick Patel maintained a Strong Buy rating and price target of $438.

“Into the print, we were admittedly cautious that LULU would guide below algo after GM%-related guidance misses in 3Q and the Holiday update in January,” Patel wrote.

“New guide reflects 1QTD strength and expectations of strong global growth (International is outperforming; China accelerating),” he added.

Telsey Advisory Group On Lululemon Athletica

Analyst Dana Telsey reiterated an Outperform rating and price target of $425.

“While inventory remains somewhat elevated at year-end, nearly half consists of core seasonless product and management expects inventory to be more in-line with sales by the back half of the year,” Telsey stated.

“The FY23 outlook did not disappoint, besting expectations on the top and bottom lines for both the first quarter and full year, reflecting strong first quarter-to-date momentum,” she added.

Bernstein On Lululemon Athletica

Analyst Aneesha Sherman reaffirmed an Underperform rating while raising the price target from $290 to $320.

“We like Mgmt's decisions on China, Mirror and costs, all of which will protect margins,” Sherman said in a note. “Moving away from the previous scattershot approach, intl expansion is focused on China now, a profitable mkt with upside on market share, store productivity and margins,” she added.

Guggenheim Securities On Lululemon Athletica

Analyst Robert Drbul maintained a Buy rating while raising the price target from $400 to $440.

“We continue to believe that China (8% of sales) holds significant growth potential for LULU as reopening of the region could further boost and help achieve the company's target to quadruple international revenues by 2026,” Drbul wrote in a note.

“We also believe demand for LULU's merchandise remains healthy and strong (along with its brand) as competitive pressures from emerging athletic brands are overestimated, in our view,” he added.

LULU Price Action: Shares of Lululemon Athletica jumped by 13.14% to $362.41 at the time of publication Wednesday.

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTrading IdeasAlex StratonAneesha ShermanApparelathletic apparelBernsteinDana TelseyExpert IdeasGuggenheim SecuritiesKeyBanc Capital MarketsMorgan StanleyNoah ZatzkinRaymond JamesRick PatelRobert DrbulSharon ZackfiaTelsey Advisory GroupWilliam Blair