Jefferies Raises Price Target for Lululemon Athletica Inc., Maintains Underperform Rating
In a recent update, Jefferies has adjusted its stance on Lululemon Athletica Inc. (NASDAQ: LULU), raising the price target to $300 from the previous $250, while maintaining an Underperform rating on the stock. This move comes in response to the company’s robust results that defied earlier expectations of a peak in momentum.
Despite the increase in the price target, Jefferies expressed concerns regarding Lululemon’s men’s product line and the potential decline in the popularity of the belt bag trend. The firm also highlighted the challenging comparisons Lululemon faces in 2024. Additionally, recent survey results and alternative data suggest possible emerging issues for the company.
These factors have influenced Jefferies’ decision to maintain the Underperform rating, as the firm’s concerns are based on specific expectations and market data that imply potential difficulties ahead for Lululemon. The analyst’s comments reflect a cautious outlook on the stock’s future performance, despite recognizing the company’s past success and strong brand reputation.
As Lululemon Athletica Inc. (NASDAQ: LULU) navigates through 2024 with a resilient brand, its market capitalization stands strong at $58.81 billion, demonstrating its significant presence in the industry. Investors have shown willingness to pay a premium for Lululemon’s earnings potential, as reflected by its relatively high P/E ratio of 59.35.
Lululemon’s robust revenue growth of 23.01% over the last twelve months as of Q3 2024 further solidifies the company’s ability to expand in a competitive market. This growth is supported by a solid gross profit margin of 57.23%, indicating efficient management of cost of goods sold and sustained profitability.
Investors considering Lululemon’s stock should take note of its liquid assets, which exceed short-term obligations and provide confidence in the company’s ability to meet immediate financial commitments. Furthermore, with 19 analysts revising their earnings upwards for the upcoming period, there is a positive sentiment surrounding Lululemon’s performance prospects.
Analyst comment
Positive news. Jefferies raises price target for Lululemon Athletica Inc. to $300 from $250. The market is expected to respond positively, with increased investor confidence in the company’s ability to meet financial commitments and solid revenue growth. However, Jefferies maintains an underperform rating due to concerns about specific product lines and potential challenges in the future.