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Lululemon Athletica's 4Q16 Earnings: What You Can Expect

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Part 5
Lululemon Athletica's 4Q16 Earnings: What You Can Expect PART 5 OF 5

LULU Stock: Wall Street Remains Neutral ahead of Q4 Earnings

Wall Street’s view on LULU

In this last part of this series, we’ll look at Wall Street’s recommendation for Lululemon Athletica (LULU).

Wall Street has a neutral view on the company and has rated the stock a 2.4 on a scale of 1 (strong buy) to 5 (sell). In comparison, sportswear peers Foot Locker (FL), Nike (NKE), and Columbia Sportswear (COLM) have received better ratings of 1.9, 2.1, and 2.2, respectively. Under Armour (UAA), however, is among the worst-rated at 2.8.

LULU is covered by 35 Wall Street analysts. Of these, 51% have recommended buying the stock while 43% have recommended holding it. Only 6% of these analysts think the company is currently a “sell.”

In comparison, 3% and 5% analysts suggest selling the stocks of Nike and Columbia Sportswear, respectively, while none recommend selling Foot Locker. Under Armour has 15% sell recommendations.

LULU Stock: Wall Street Remains Neutral ahead of Q4 Earnings

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Price target

Lululemon is currently trading at $64.04, ~28% below its 52-week high price. Wall Street expects its stock price to reach $73.81, which indicates an upside of ~15% over the next 12 months. The company’s stock price has been revised by a couple of research houses over the last few days.

Recent analyst actions

On March 9, Canaccord Genuity reduced Lululemon’s target price to $45 from $47 while maintaining the sell rating. The analyst commented in a note, “We believe Lululemon’s focus on yoga bottoms (pants and crops) has been a tremendous asset to comparable store sales growth, but little innovation and only modest design updates to its assortment run the risk of the category becoming a liability.”

On March 8, Deutsche Bank raised the target price to $65 from $64.

ETF investors seeking to add exposure to LULU can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.38% of its portfolio in LULU.

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