Lululemon stock jumps 13% as analysts hike estimates
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Lululemon Athletica (NASDAQ:LULU) stock surged to a double-digit gain after beating earnings expectations and sparking upward estimate revisions on the Street.
For its fiscal fourth quarter, the Canadian athleisure company reported a beat on top and bottom lines and while margins were somewhat compressed, both comparable sales and direct to consumer sales roared past estimates. Additionally, guidance came in well-above expectations, prompting analysts to raise estimates and price targets accordingly.
âImportantly, resurgent full-price selling, inventory trends, reduced purchase commitments, and airfreight relief support expectations for gross margin led EBIT margin expansion in FY23,â Stifel analyst Jim Duffy said in an appraisal of the results and guidance. âBearish discourse around slowing growth and promotional risk to margin has been silenced, and we expect focus returns to global growth opportunities. We reaffirm our conviction in LULU as a core growth holding and continue to view shares undervalued.â
He reaffirmed his Buy rating on the stock and hiked his price target to $460 from a prior $450. 
Bank of America analyst Lorraine Hutchinson added that the exceptionally strong sales means that the inventory issue can effectively fix itself and no undue promotions are necessary. She hiked her sales targets for 2024 to $9.39B from a prior $9.1B and 2025 revenue estimates from $10.2B to $10.73B. Hutchinsonâs EPS estimates moved from $11.18 to $11.61 for 2024 and from $13.26 to $13.48 for 2025, taking her price target to $410 from a prior $380.
Finally, William Blair advised that there remains upside for investors even after the sharp post-earnings pop.
âWe continue to view the risk/reward profile on lululemonâs stock as attractive given relatively high earnings visibility courtesy of a higher-income customer demographic and strong brand momentum (strongest global market share gainer in adult active apparel industry over the past four years), significant opportunity to grow brand awareness (just 25% in the United States versus peers in the 80%- plus range), and compelling valuation,â the firmâs analysts advised. 
Shares of Lululemon (LULU) closed up 12.72% on Wednesday.
Dig into the sell-side ratings on the stock.