Why Analysts Are So Mixed After Lululemon’s Disappointing Guidance

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Lululemon Athletica Inc. (NASDAQ: LULU) tanked after earnings and guidance, putting in a new 52-week low. While almost every analyst has lowered expectations, and while some outright downgrades were seen, there are many analysts who are still keeping their Buy and Outperform ratings alive. But for the most part, a lot of analysts cut their targets.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts said afterward.

The company posted $0.99 in earnings per share (EPS) and $789.9 million in revenue. Consensus estimates from Thomson Reuters had called for $1.01 in EPS and revenue of $783.56 million. The fiscal fourth quarter of last year reportedly had EPS of $0.85 and $704.28 million in revenue.

Total comparable sales, which includes store sales and direct-to-consumer sales, increased 8%, or by 7% on a constant dollar basis. Comparable store sales rose by 6%.

For the fiscal first quarter, the company expects to see EPS in the range of $0.25 to $0.27 and revenues between $510 million and $515 million. The consensus estimates are $0.39 in EPS and $552.35 million in revenue.

A few analysts weighed in on Lululemon after earnings:

  • Oppenheimer is maintaining an Outperform rating and a $75 price target, but the firm has lowered earnings expectations.
  • Wedbush maintained its Outperform rating but lowered its target price to $64 from $81.
  • Merrill Lynch downgraded Lululemon to Underperform from Neutral and cut the price objective to $51.
  • Wells Fargo downgraded it to Market Perform.
  • Susquehanna cut its rating to Neutral.
  • Goldman Sachs cut its price target to $56 from $65.
  • RBC has an Outperform rating but cut its price target to $64 from $80.
  • BMO has a Market Perform rating and lowered its price target to $55.
  • MKM Partners still has a Buy rating, but it cut its price target from $90 to $75.
  • Deutsche Bank maintained a Hold rating and cut its price target to $58 from $65.
  • Nomura maintained a Buy rating but cut its price target to $65 from $72.
  • Canaccord Genuity has a sell rating and lowered its price target to $41 from $45.

Shares of Lululemon were trading down 22% at $51.59 on Thursday, with a consensus analyst price target of $73.81 and a 52-week trading range of $51.31 to $81.81.