Lululemon Earnings Preview: What the Analysts are Saying

Lululemon Athletica LULU will report its fourth quarter results on Thursday before the market opens.

The company is expected to report an EPS of $0.72, on revenue of $516.8 million.

The last time Lululemon reported its quarterly results was on Dec, 12. At that time, the company earned $0.45 per share, which came $0.04 higher than estimates -- but revenue of $376.2 million fell short of the $379.9 million analysts expected.

On Feb. 18, analysts at Oppenheimer raised their rating on Lululemon from Perform to Outperform, and noted the new management team at Lululemon could propel the company to a new growth cycle.

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Investors will be following Lululemon's earnings and subsequent conference call very closely for hints about whether the company's management team has steered the ship, or if the company has not yet recovered from its 2013 woes.

JPMorgan: Wait and see

Brian Tunick, analyst at JPMorgan, believes Lululemon shares will have a “very outsized” move when the company reports its earnings. In a note to clients on March 24, he maintained an Overweight rating but lowered the price target to $58 from a previous $74.

Following Lululemon's results, the company will host an Analyst Day event on April 17 -- where the street will get up close and personal with the new CEO Laurent Potdevin for the first time.

Tunick sees opportunity for Lululemon to grow in the long-term, given several near-term catalysts, which include the company's grand opening of its London store in the next few weeks and the benefit of easier 2013 comparisons as supply chain issues are lapped.

Further down the road this year includes the rollout of new Chief Product Officer Tara Poseley's new product in the fourth quarter and easier holiday comparisons.

Tunick is forecasting Lululemon to earn $0.72 per share, on revenue of $515.0 million.

Deutsche Bank: Sitting On The Sidelines

Dave Weiner, analyst at Deutsche Bank, maintained a Hold rating in a note to clients on March 24, with a price target lowered to $55 from a previous $65. In his note, Weiner explained the bulls and bears both present valid investments thesis, but there is very little clarity at this time to support either side.

One of the key metrics that Weiner will look out for during Lululemon's earnings and conference call is management's comments on comps.

“This is the key metric, as without a management view that trends will revert positive in relatively short-order, we don't believe the stock can work,” Weiner argued in his note. He also added that management needs to provide further brand differentiation in the “ath-leisure” space that is full of competition.

Weiner is forecasting Lululemon to earn $0.73 per share, on revenue of $517.0 million.

Mizuho: Expecting Poor Guidance

Betty Chen, analyst at Mizuho Securities, maintained a Neutral rating in a note to clients on March 24 -- with a price target lowered to $48 from a previous $50. In her note, Chen cautioned that Lululemon could report below consensus guidance on weak trends and business investments.

Chen believes that Lululemon's Potdevin will outline his vision for the company's future, which may include further necessary investments to improve product quality and to support future growth. By doing so, the company would add further margin pressures -- as investors continue to wait for a reacceleration in comp momentum. Chen believes that Lululemon will forecast its first quarter EPS to be $0.30, below the Street's consensus of $0.40.

Chen is forecasting Lululemon to earn $0.75 per share, on revenue of $516.0 million.