What's Going On With Lululemon Stock After Earnings?

Lululemon Athletica Inc. LULU shares are falling Friday after the company issued weak guidance on lower consumer demand.

The Details:

Lululemon reported its fourth-quarter results after the bell Thursday with quarterly earnings of $5.29 per share, which beat analyst estimates of $4.97 per share. Quarterly sales increased 16% year-over-year to $3.205 billion, beating the consensus estimate of $3.194 billion. 

However, the retailer guided first-quarter revenue in the range of $2.175 billion to $2.2 billion, versus estimates of $2.25 billion. The company sees first-quarter earnings of $2.35 to $2.40 per share, versus estimates of $2.55 per share.

On the company's earnings call, Lululemon executives said the guidance was based on a slower start to the year for the U.S. consumer. 

Several analysts lowered price targets on the stock following the print: 

• Piper Sandler maintained Lululemon Athletica with an Overweight and lowered the price target from $560 to $525.
• Stifel analyst Jim Duffy reiterated his Buy rating and lowered the price target on the stock from $596 to $539.
• Wedbush analyst Tom Nikic maintained an Outperform and lowered the price target from $548 to $492.
• Citigroup analyst Paul Lejuez maintains Lululemon Athletica with a Buy rating and lowered the price target from $520 to $500.
• Needham maintained its Buy rating and lowered the price target on the stock from $525 to $500.
• TD Cowen analyst John Kernan maintains Lululemon Athletica with an Outperform and lowered the price target from $553 to $515.

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LULU Stock Forecast in 2030:

While past performance is not a direct indicator of future results, investors should have an idea of a stock's historical growth rate and systemic risk. Lululemon Athletica has grown 26.71% over the past 5 years compared to 13.37% growth in the S&P. Lululemon Athletica has a beta of 0.63, suggesting low volatility when compared to the S&P 500.

Lululemon Athletica operates in the Consumer Discretionary sector and has a forward P/E ratio of 33.78, which is above the S&P 500 average of 23.13. A higher ratio suggests that investors are paying a high price today for expected future returns.

Growth stocks can generate high returns over the long term but can also be more volatile and considered riskier. Conversely, a lower ratio generally indicates more stable revenues and less expected volatility.

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LULU Price Action: According to Benzinga Pro, Lululemon Athletica shares are down 18.2% at $391.84 at the time of publication.

Image: Pedro Alvarez from Pixabay