On Friday, TD (TSX:TD) Cowen adjusted its outlook on Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU), reducing the price target to $515 from the previous $553, while maintaining an Outperform rating on the stock. The adjustment reflects the firm's analysis of current market conditions and the company's performance.
The firm acknowledges the current macroeconomic environment is experiencing turbulence, specifically noting that comparable store sales in the Americas could see a mid to high single-digit decline in the first quarter. Despite these challenges, the firm emphasizes Lululemon's effective management of gross margins and selling, general, and administrative expenses (SG&A).
Lululemon's international sales, which account for 23% of the fiscal year 2024's revenue, are identified as an increasingly important factor for the company's top-line growth. The revised price target is set at 31 times the estimated earnings per share (EPS) for fiscal year 2025 and 19 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
With the competitive landscape being more challenging than ever due to emerging brands, TD Cowen's stance on Lululemon remains positive. The firm reiterates its confidence in the company's strategic execution, particularly in the areas of gross margin and cost management.
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