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Wall Street Action after Lululemon’s Guidance Update

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Lululemon’s stock price movements

As we discussed already in this three-part series, Lululemon Athletica (LULU) recorded strong holiday sales recently, which prompted the company to raise guidance on January 8. However, unlike other retailers, the company’s stock didn’t show much strength on the positive news. The yoga apparel retailer only gained 0.6% in the next trading session.

Nevertheless, Lululemon had a great 2017. The company gained more than 20% during the year. Sportswear peers Nike (NKE) and Columbia Sportswear (COLM) also recorded solid gains in 2017. The two companies gained 23% each. Under Armour (UAA), in contrast, fell more than 50% during the year.

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Recent analyst actions

Lululemon’s price target was lifted by Stifel and Suntrust Robinson after the company raised guidance for the upcoming quarter. Suntrust Robinson raised the price target from $80 to $90, and Stifel lifted it from $75 to $81.

While none of the analysts raised the company’s rating, they were broadly positive after the guidance update.

“LULU’s 4Q guidance raise driven by outperformance in digital and continued strength in the bottoms businesses. Longer-term, we believe omnichannel inventory management strategy, personalized CRM efforts, consistent innovation in pants fabrication, & opportunities for improvement in tops and accessories can drive momentum through FY18,” said Oliver Chen of Cowen & Co.

Wall Street recommendation summary

Lululemon is covered by 33 Wall Street analysts. It’s recommended as a “buy” by 55% of analysts, including Bank of America, Citigroup, and Susquehanna. 42% of analysts—including Wells Fargo and Canaccord Genuity—recommend holding Lululemon’s stock. Only 3% of the analysts have a “sell” rating on the company.

LULU is sitting close to its 52-week high price. Wall Street doesn’t see much upside for the stock. Analysts, on average, expect the company’s stock price to increase ~1% over the next 12 months.

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