Lululemon impresses analysts with strong sales growth despite headwinds
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Lululemon (NASDAQ:LULU) soared in early trading on Wednesday after the retailer's Q4 earnings report dazzled investors and analysts.
Bank of America (Buy, price objective $450): "LULUâs accelerating momentum into 1Q and favorable outlook support our view that it gained share during the pandemic and is well positioned for growth; reiterate Buy. The F2022 guidance for sales growth of 20-22% (23-24% 3-year CAGR) was a positive surprise versus the long-term plan of low-teens and is based on core growth plus new products and categories. 1Q is off to a strong start, and the outlook calls for 24-26% sales growth."
Morgan Stanley (Equal-weight, price target $300): "All in, we are impressed with the acceleration in the business following management trimming initial 4Q21 guidance to the low end of its previous range in early January as a result of higher-than-expected freight costs & Omicron impacts to store capacity & traffic."
Wells Fargo (Equal Weight, price target $370): "Bulls finally got some much-needed good news, as LULU offered a strong +20-22% FY rev guide, including "accelerated momentum QTD" and a +24-26% guide for 1Q (a rare 1Q-weighted rev guide for our space), with FY EPS above Street. If there's a sticking point to call out, LULU is planning margins similar YoY (and to 2019) which begins to put into question if there's more margin to come. Next month's Analyst Day will be the next key catalyst as management unveils their new 5-Year growth plan (after surpassing 2018's plan fairly handily)."
BTIG (Buy, price target upped to $491): "Taken together, LULU posted another solid quarter despite persistent macro/Omicron/transit headwinds. Supported by a solid balance sheet and $1.2B in cash, the Board authorized a new $1B share buyback underscoring its confidence in the long-term opportunity for the brand. Given LULU's remarkable consistency of execution and long pathway for both share gains and profit improvements (particularly Asia), we reiterate our BUY rating and raise our PT to $491 as we roll our estimates out to F23."
Lululemon (LULU) also attracted notable price target boosts from Deutsche Bank to $428 from $410 and Cowen to $507 from $491.
Shares of Lululemon (LULU) rose 7.24% in premarket action to $368.89 after gaining 3.67% on Monday in the regular session.
Check out the earnings coverage: Lululemon rallies after topping estimates for holiday quarter, posting strong guidance.