Wall Street’s views remain divided on the stock of athletic apparel retailer Lululemon Athletica (LULU). On TipRanks, LULU stock has a Moderate Buy consensus rating based on 13 Buys, eight Holds, and one Sell recommendation. Meaningful changes in analysts’ price targets for LULU stock came after the retailer paused the sales of its Breezethrough leggings, both in the physical and online stores.
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This was followed by mixed results for Q2 FY24 and an underwhelming guidance that dragged the shares down. Adjusted earnings per share (EPS) beat expectations, but sales marginally missed the consensus estimates.
Analysts Cut Price Target After LULU’s Q2 Print
Seven of the 17 analysts who rated LULU stock post the Q2 print cut their price targets on the stock, citing an unfavorable macro backdrop and the company’s Breezethrough fiasco. What’s worse, LULU faces class action lawsuits alleging that management misled investors about the company’s sales prospects and inventory management mechanism.
Overall, the average Lululemon Athletica price target of $317.95 implies 19.2% upside potential from current levels. Meanwhile, LULU shares have already declined 47.8% year-to-date.
LULU Stock Boasts a “Perfect 10” Smart Score
Despite Wall Street’s cautiously optimistic stance, LULU stock boasts a “Perfect 10” Score based on TipRanks’ Smart Score Rating system. Let’s see some of the parameters that have helped the stock gain a perfect score.
Hedge funds have increased their holdings of LULU stock by 48,500 shares in the last quarter, giving it a Very Positive Hedge Fund Confidence Signal.
Similarly, LULU stock carries a Positive Insider Confidence Signal, as LULU’s CEO and Director Calvin McDonald bought $1 million worth of LULU stock in the past three months.
At the same time, Bloggers have a 76% Bullish sentiment on LULU stock based on 85 Blogger opinions.
Interestingly, retail investors are loading up LULU shares despite the negativity surrounding the stock. LULU has a Very Positive Investor Sentiment on TipRanks, as the number of portfolios holding LULU stock increased by 6.6% in the past 30 days.
Is LULU Losing Market Share?
We can see from TipRanks’ Website Traffic tool that visits across all of LULU’s global websites have been growing rapidly this year. According to TipRanks’ Website Traffic tool, the total estimated visits to all of LULU’s apps and websites worldwide increased by an impressive 53.24% year-to-date compared to last year.
LULU Trades at Cheaper Multiples
From a valuation perspective, LULU stock trades at a massive discount to its own historical averages. LULU currently trades at a P/S (price-to-sales) multiple of 3.4x, representing a 55% discount to its 5-year average. Also, its current P/E Non-GAAP (price-to-earnings) multiple stands at 19.75x, reflecting a 60% discount to the stock’s 5-year average.
Conclusion
The different stats discussed above indicate the resilience of Lulu’s business model. Moreover, the stock is trading at attractive valuation levels. However, Wall Street is cautiously optimistic due to near-term pressures, including macro challenges and company-specific risks.
