On Monday, Stifel analysts maintained their Buy rating on Lululemon Athletica Inc. (NASDAQ:LULU).
The company's preannouncement of fourth-quarter 2024 results indicated revenues between $3.56 billion and $3.58 billion, marking an increase of 11% to 12% year-over-year. This figure surpasses the previous guidance range of $3.475 billion to $3.51 billion.
Adjusted earnings per share (EPS) are also expected to be higher, with a new range of $5.81 to $5.85, which is an improvement from the earlier forecast of $5.56 to $5.64.
The updated revenue estimate is $78 million higher than the prior guidance, reflecting growth of 6% to 7% year-over-year for the fourth quarter of 2024, including the benefit of a 53rd week.
Additionally, Lululemon has updated its margin guidance, now expecting a year-over-year gross margin expansion of 30 basis points, compared to the previous forecast of a contraction between 30 basis points and 20 basis points.
Selling, general, and administrative (SG&A) expenses are anticipated to deleverage by 80 to 90 basis points year-over-year, an improvement from the previously guided deleverage of 90 to 100 basis points.
Stifel analysts have updated their fourth-quarter 2024 estimates to reflect the preannounced figures. However, they have conservatively adjusted their fiscal year 2025 and 2026 estimates to account for only a portion of the fourth-quarter upside, taking into consideration potential foreign exchange headwinds from a stronger U.S. dollar.
Reaffirming the $438 price target, Stifel justifies the valuation with a 24.9 times price-to-earnings (P/E) multiple based on their fiscal year 2026 estimated EPS of $17.60. The analysts' outlook remains positive as they continue to recommend Lululemon stock to investors.
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