The analyst's bottom line suggests that while Lululemon still faces challenges, a combination of a revitalized product line, the cycling out of popular products like the belt bag, and less competition could support a stronger case for the company's price-to-earnings (P/E) ratio to approach the mid-20s. InvestingPro's comprehensive analysis shows LULU maintains a strong financial health score of 3.18 (rated as "GREAT"), with a PEG ratio of 0.38 indicating attractive valuation relative to growth.
Discover the complete financial picture with InvestingPro's detailed research report, available for over 1,400 US stocks. InvestingPro's comprehensive analysis shows LULU maintains a strong financial health score of 3.18 (rated as "GREAT"), with a PEG ratio of 0.38 indicating attractive valuation relative to growth. Discover the complete financial picture with InvestingPro's detailed research report, available for over 1,400 US stocks.
The adjustment follows the anticipation that competitor Alo will shift away from the Athleisure/Yoga market and rebrand itself as a luxury label by 2025. This repositioning is expected to ease the competitive pressure on Lululemon, which has been significant over the past two years.
The analyst's bottom line suggests that while Lululemon still faces challenges, a combination of a revitalized product line, the cycling out of popular products like the belt bag, and less competition could support a stronger case for the company's price-to-earnings (P/E) ratio to approach the mid-20s. InvestingPro's comprehensive analysis shows LULU maintains a strong financial health score of 3.18 (rated as "GREAT"), with a PEG ratio of 0.38 indicating attractive valuation relative to growth. Discover the complete financial picture with InvestingPro's detailed research report, available for over 1,400 US stocks.
The report also indicates that Lululemon is expected to revive innovation and newness in its product lines under new design leadership, starting in the first quarter of 2025. This comes after a period of disruption within the company's creative team. The analyst believes that if Lululemon can deliver improved products and capitalize on Alo's market departure, it could see a return to 3-4% comparable store sales (SSS) growth in the Americas in 2025.
The analyst's bottom line suggests that while Lululemon still faces challenges, a combination of a revitalized product line, the cycling out of popular products like the belt bag, and less competition could support a stronger case for the company's price-to-earnings (P/E) ratio to approach the mid-20s. This would be an increase from the current P/E ratio of around 22 times, although still likely below the two-year average P/E ratio of approximately 27 times.
In other recent news, Lululemon Athletica (NASDAQ:LULU) Inc. reported a 7% rise in second-quarter total revenue, reaching $2.4 billion, and earnings per share (EPS) of $3.15, surpassing the expected $2.94. However, the fiscal year 2024 sales growth forecast was revised from 11-12% to 8-9%. Citi maintained a Neutral rating on shares of Lululemon, with a consistent price target of $270.00, projecting a third-quarter earnings per share (EPS) beat, anticipating $2.79 versus a consensus of $2.68, driven by a modest comparable sales increase.
Oppenheimer maintained its Outperform rating but reduced the price target to $380, reflecting current trends within the company and the broader athleisure sector. Morgan Stanley (NYSE:MS) kept its Overweight rating and raised the price target to $345, expecting a modest third-quarter earnings beat. Meanwhile, Needham initiated coverage with a Hold rating due to multiple challenges the company is currently facing.
Baird raised its price target to $380 while maintaining an Outperform rating, reflecting a cautiously optimistic stance despite some headwinds. Truist Securities maintained a Buy rating and increased the stock's price target to $360, reflecting a positive outlook on the company's performance.
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