Are Analysts Too Optimistic on Lululemon After Earnings?
While this might be a great time for Lululemon investors to lock in their gains and take profits, analysts mostly are calling for the stock to continue its massive run.
Lululemon Athletica Inc. (NASDAQ: LULU | LULU Price Prediction) released fiscal third-quarter financial results after markets closed Wednesday. Although this quarter was fairly positive, the stock sold off, after having nearly doubled so far in 2019. While this might be a great time for investors to lock in their gains and take profits, analysts mostly are calling for Lululemon to continue its massive run.
24/7 Wall St. has included some highlights from the earnings report, as well as what analyst are saying about the stock afterward.
The yoga-apparel retailer said that it had $0.96 in earnings per share (EPS) and $916 million in revenue, compared with consensus estimates that called for $0.93 in EPS and $899.66 million in revenue. The same period of last year reportedly had $0.75 in EPS and $747.66 million in revenue.
Overall, revenues increased 23% year over year and 23% on a constant currency basis. Direct to consumer net revenue represented 26.9% of total net revenue, compared to 25.3% last year.
Total comparable sales increased 16% from last year, or up 17% in constant currency. Comparable store sales increased by 10%, while direct to consumer net revenue increased by 11%.
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Looking ahead to the fiscal fourth quarter, the company expects to see EPS in the range of $2.10 to $2.13 and revenue between $1.315 billion and $1.330 billion. Consensus estimates are calling for $2.13 in EPS and $1.32 billion in revenue for the quarter.
Here’s what analysts had to say about Lululemon after earnings:
- Goldman Sachs reiterated it as Neutral and raised its target to $219 from $193.
- D.A. Davidson has a Neutral rating with a $220 target price.
- Morgan Stanley reiterated it as Equal Weight and raised its target to $214 from $169.
- Stifel reiterated a Buy rating with a $273 target price.
- Piper Jaffray reiterated an Overweight rating with a $245 price target.
- Credit Suisse reiterated an Outperform rating with a $250 price target.
- MKM Partners reiterated a Buy rating with a $258 price target.
- Needham reiterated a Hold rating.
- Susquehanna reiterated a Buy rating with a $260 price target.
- Guggenheim reiterated a Buy rating with a $250 price target.
- Wells Fargo reiterated it as Overweight and raised its target to $260 from $230.
Shares of Lululemon traded down about 2% on Friday to $220.68, in a 52-week range of $110.71 to $235.50. The consensus price target is $240.89.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
