Lululemon Athletica now expects 4Q sales and earnings to be at the high end of its previous guidance range as the athletic apparel and accessories retailer benefited from strong demand during the holidays.
Previously, Lululemon (LULU) had projected sales to grow in the mid-to-high teens range on a year-on-year basis. For adjusted earnings per share, the company had forecasted year-over-year growth in the mid-single digits.
Lululemon said that strong demand during the holiday shopping season and strength at its digital and physical stores drove growth during the fourth quarter. Furthermore, the company remains optimistic about growth opportunities in 2021. (See LULU stock analysis on TipRanks)
On Dec. 10, Lululemon reported better-than-expected 3Q results. Net revenue grew 22% to $1.12 billion year-on-year and surpassed analysts’ expectations of $1.01 billion. Adjusted EPS of $1.16 beat Street estimates of $0.87 and improved 20.8% from the $0.96 reported during the same period last year.
Argus Research analyst John Staszak on Dec. 14 raised the stock’s price target to $400 (10.6% upside potential) from $380 and reiterated a Buy rating. Staszak anticipates further recovery in Lululemon’s earnings post the distribution of the COVID-19 vaccine. The analyst cited LULU’s strong brand image and growing direct-to-consumer sales, and believes that there is an opportunity for the company to grow outside of North America, mainly in China.
Consensus among analysts is a Moderate Buy based on 11 Buys and 4 Holds. The average price target of $407.80 implies upside potential of 12.8% to current levels. That’s after shares already rallied about 54% over the past year.
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