On Friday, BMO Capital Markets adjusted its outlook on Lululemon Athletica Inc. (NASDAQ:LULU), increasing the apparel retailer's stock price target to $420 from the previous $408. Despite the price target hike, the firm maintained a Market Perform rating on the stock.
Lululemon reported a quarter that surpassed expectations in terms of revenue and earnings per share (EPS), driven by strong gross margins. The performance in international markets outshone that of the Americas, which did not meet the anticipated growth.
The company's management has provided guidance for the first quarter and the full year that falls below the consensus, attributing the cautious outlook to a sluggish start in the U.S. market.
The analyst from BMO Capital believes that the company's conservative guidance could mean that any necessary revisions to published estimates may not be as drastic as the initial after-market decline in Lululemon's share price suggests. The revised stock price target reflects a forward-looking valuation as the analyst's perspective rolls into the fiscal year 2025.
In the analyst's view, the current valuation of Lululemon shares places the onus on company management to address and alleviate concerns regarding North American market performance. The market's response to this updated guidance and price target will be observed in the coming trading sessions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.