KeyBanc has revised its price target for Lululemon (LULU, Financial), reducing it from $400 to $350, while maintaining an Overweight rating on the stock. The adjustment follows Lululemon's first-quarter results, which surpassed expectations, although the company's fiscal year 2025 revenue forecast remains unchanged. However, expectations for earnings per share have been lowered. KeyBanc highlights promising developments in Lululemon's new product lines, which could become significant contributors in the future.
The firm believes Lululemon's strong market position will allow it to weather the current economic challenges effectively. This includes strategic price increases and managing the effects of tariffs. Despite the lowered estimates and revised targets, KeyBanc remains positive about Lululemon's ability to thrive in the existing macroeconomic climate.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 30 analysts, the average target price for Lululemon Athletica Inc (LULU, Financial) is $325.52 with a high estimate of $500.00 and a low estimate of $194.00. The average target implies an downside of 1.59% from the current price of $330.78. More detailed estimate data can be found on the Lululemon Athletica Inc (LULU) Forecast page.
Based on the consensus recommendation from 35 brokerage firms, Lululemon Athletica Inc's (LULU, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lululemon Athletica Inc (LULU, Financial) in one year is $530.16, suggesting a upside of 60.28% from the current price of $330.78. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lululemon Athletica Inc (LULU) Summary page.
LULU Key Business Developments
Release Date: June 05, 2025
- Total Revenue: Increased 7% or 8% on a constant currency basis to $2.4 billion.
- Gross Margin: Increased 60 basis points to 58.3%.
- Earnings Per Share (EPS): $2.60, ahead of expectations.
- Share Repurchases: $430 million worth of stock repurchased.
- Net Income: $315 million.
- Operating Income: $439 million or 18.5% of net revenue.
- Cash and Cash Equivalents: Approximately $1.3 billion.
- Store Count: Ended the quarter with 770 stores globally.
- Comparable Sales: Increased 1% overall.
- Regional Revenue Growth:
- Americas: Increased 3% or 4% in constant currency.
- China Mainland: Increased 21% or 22% in constant currency.
- Rest of World: Increased 16% or 17% in constant currency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lululemon Athletica Inc (LULU, Financial) reported a 7% increase in total revenue for Q1 2025, or 8% on a constant currency basis, reaching $2.4 billion.
- Gross margin improved by 60 basis points to 58.3%, driven by lower product costs and improved markdowns.
- The company continued its share repurchase program, buying back $430 million of stock, demonstrating confidence in its long-term prospects.
- Revenue in China Mainland increased by 22% in constant currency, showcasing strong growth in this key market.
- Lululemon Athletica Inc (LULU) maintained its full-year revenue guidance, expecting 7% to 8% growth, indicating confidence in its strategic initiatives.
Negative Points
- The U.S. market showed only a 2% revenue growth, with consumers remaining cautious and intentional about their buying decisions.
- The company anticipates a 110 basis point decrease in gross margin for the full year due to increased tariffs.
- SG&A expenses increased to 39.8% of net revenue, up from 38.1% last year, driven by FX revaluation losses.
- Operating margin decreased to 18.5% from 19.6% in Q1 2024, reflecting increased costs and strategic investments.
- Lululemon Athletica Inc (LULU) expects a decline in operating margin by approximately 160 basis points for the full year, primarily due to tariffs and increased markdowns.
