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Piper Sandler cuts Lululemon shares, eyes US slowdown, upbeat on China

EditorEmilio Ghigini
Published 03/22/2024, 07:34 AM
© Reuters.

On Friday, Piper Sandler adjusted the share price target for Lululemon Athletica Inc. (NASDAQ:LULU), reducing it to $525 from the previous $560 while sustaining an Overweight rating on the stock.

This adjustment follows Lululemon's announcement of robust fourth-quarter results, although the company provided a somewhat disappointing forecast for the fiscal year 2024. The revised price target reflects a more cautious outlook due to a notable slowdown in the United States, which has raised questions about the company's market share potential.

The analyst from Piper Sandler noted that the deceleration in U.S. sales could be attributed to the company lapping higher markdowns and a general spending slowdown between purchasing periods. The firm is monitoring Lululemon's introduction of new spring products, including skirts, shorts, and tanks, to gauge consumer response and the potential impact on sales.

Despite the reduced sales expectations, Lululemon's international growth was a strong point in the fourth quarter, particularly in China, where sales surged by 78%. The company's international expansion is anticipated to continue driving growth throughout 2024. According to the analyst, this international performance is a key factor in supporting Lululemon's ongoing success.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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