Lululemon (NASDAQ:LULU) is demonstrating that, for higher-income households at least, consumer sentiment is still robust despite inflation and subsequent policy responses. As of this writing, LULU stock is up about 13% following a positive earnings disclosure yesterday. Several analysts have hiked up their price targets as a result.
According to CNBC, for the fiscal fourth quarter ended Jan. 29, Lululemon posted adjusted earnings per share of $4.40. This handily beat the consensus EPS estimate of $4.26. On the top line, the retailer also generated $2.77 billion in revenue, exceeding the expected $2.7 billion. Further, that revenue represents a sizable increase from sales of $2.13 billion in the year-ago quarter.
To be fair, not everything aligned favorably for LULU. In particular, the company’s fiscal Q4 net income fell to $119.8 million, or 94 cents per share. That was down from $434.5 million the same time last year, or $3.36 per share.
Still, the overall tone of the report has commanded optimism. Management expects fiscal 2023 revenue to land between $9.3 billion and $9.41 billion, exceeding Wall Street’s expectations of $9.14 billion. In addition, Lululemon expects full-year profit of between $11.50 and $11.72 per share. That stands up favorably next to Refinitiv estimates of $11.26 per share.
Analysts Weigh In on LULU Stock
With Lululemon’s strong showing and optimistic outlook, many analysts reiterated their bullishness on LULU stock. For example, Raymond James Managing Director Rick Patel called Lululemon “one of the few companies in the space that has a very long pathway for growth, and it’s also a very highly visible one.”
In response to the report, Patel reiterated a “strong buy” rating on LULU stock, along with a price target of $438. Baird analyst Mark Altschwager also maintained a positive assessment, upgrading the price target to $425 from $410.
Even those who don’t have a strong view of LULU stock managed to see some positives in the report. For instance, Jefferies analyst Randal Konik has an “underperform” rating on shares but raised his price target to $225 from $200.
That said, not everyone is enthused about Lululemon. Bernstein analyst Aneesha Sherman reaffirmed an “underperform” rating on shares while raising the price target to $320 from $290. The analyst said in a note:
“We like Mgmt’s decisions on China, Mirror and costs, all of which will protect margins […] 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.”
Why It Matters
According to TipRanks, the overall analyst assessment toward LULU stock in the past three months is a consensus “moderate buy” rating. This breaks down to 19 “buy” ratings, one “hold” and three “sell” ratings. On average, the consensus price target for Lululemon comes in at $374.68.
At the time of this writing, that forecast represents about 4% upside potential.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
