3 Analysts' Key Takeaways From Lululemon Athletica's Q1 Print

Lululemon Athletica Inc LULU reported revenues of $1.61 billion, ahead of the consensus estimate of $1.53 billion, and earnings of $1.48 per share, exceeding Street expectations of $1.43 per share.

Wells Fargo On Lululemon Athletica: Analyst Ike Boruchow maintained an Equal Weight rating for the company while reducing the price target from $370 to $345.

Lululemon Athletica’s first-quarter print was mixed, the analyst said.

On the positive side, the momentum continued to be robust, the company’s second-quarter guidance was above Street expectations and management raised its full-year revenues and earnings outlook, Boruchow mentioned.

On the negative side, Lululemon Athletica missed its gross margin target due to higher air freight, the company lowered its gross margin guidance and ended the first quarter with inventory growth of 74% year-on-year, he added.

Morgan Stanley On Lululemon Athletica: Analyst Kimberly Greenberger reiterated an Overweight rating and a price target of $303.

“LULU beat 1Q expectations and is one of few Softlines retailers to raise FY guidance despite macro/supply chain volatility, reaffirming its position as one of the best growth assets in our space,” the Morgan Stanley analyst wrote in a note.

Although the full-year earnings guidance “embeds some topline deceleration,” it came in ahead of Street expectations, she added.

Telsey Advisory Group On Lululemon Athletica: Analyst Dana Telsey maintained an Outperform rating for the company while keeping the price target unchanged at $470.

“The earnings upside was driven by better-than-expected topline growth and SG&A leverage, offset by a weaker gross margin,” Telsey said in the note.

“The better-than-expected 2Q22 guidance with a month on the books is an encouraging read on current trends, while the raised annual outlook demonstrates confidence in the company’s ability to continue to deliver strong results through the back half,” the analyst added.

LULU Price Action: Shares of Lululemon Athletica had declined by 2.18% to $295.98 at the time of publication Friday.