Truist Securities has revised its price target for Lululemon Athletica Inc (NASDAQ: NASDAQ:LULU), the stock of Lululemon Athletica Inc., lowering it to $310 from the previous $415, yet reiterating its Buy rating on the company's shares.
The reassessment by Truist Securities follows Lululemon's recent announcement that it has halted sales of its Breezethrough collection, which was originally released on July 9th. The decision to pause sales was made after the company received customer feedback indicating issues with the fit and design of the newly launched products.
The Breezethrough collection, alongside efforts to address color and sizing stockouts, was anticipated to contribute to a modest acceleration in the company's second-half revenue.
Meanwhile, Lululemon Athletica reported first-quarter earnings per share (EPS) of $2.54, driven by a 40% rise in international sales and a modest 2% increase in U.S. sales. The company also expanded its share repurchase program by an additional $1 billion.
In response to these results, Baird lowered its price target for Lululemon to $470, citing mixed U.S. customer traffic and spending indicators. However, the firm remains optimistic about the company's performance in the second half of the year.
Deutsche Bank (ETR:DBKGn) resumed coverage on Lululemon, setting a Hold rating and a price target of $357, citing increasing competition and a trend towards more formal attire. KeyBanc revised its price target for Lululemon, reducing it to $415 from $515, while BofA Securities raised its price target for Lululemon to $440. Also, BMO (TSX:BMO) Capital cut its share price target to $384.
InvestingPro Insights
As Truist Securities adjusts its outlook on Lululemon Athletica Inc. (NASDAQ:LULU), investors may find additional context in the latest metrics and insights from InvestingPro. Lululemon is currently trading at a P/E ratio of 20.02, which is modest relative to its near-term earnings growth, suggesting potential value at its current price point. Additionally, the company's robust revenue growth of 15.65% over the last twelve months, as of Q1 2023, underscores its operational strength despite the recent hiccup with the Breezethrough collection. With gross profit margins standing at 58.34%, Lululemon demonstrates a strong capacity to maintain profitability.
InvestingPro Tips highlight that Lululemon holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability. Moreover, the company's liquid assets exceed short-term obligations, further affirming its solid financial footing. These aspects may provide some reassurance to investors concerned about the recent sales halt and stock price decline. For those interested in deeper analysis, InvestingPro offers additional tips, with a total of 12 more insights available, which could be particularly useful for evaluating the company's future prospects. To access these insights and more, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/LULU.
Overall, while the pause in sales of a key product line is a setback, the fundamental health of Lululemon as indicated by InvestingPro data, coupled with the company's long-term performance and market position, may continue to offer a compelling narrative for investors considering the stock.
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