Retail

Are Analysts Too Optimistic on Lululemon After Earnings?

Lululemon Athletica Inc. (NASDAQ: LULU) 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%.

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.