Lululemon (LULU) Surges 13% After Beating Q2 Estimates, Analysts Raise PTs to Reflect Broad-Based Strength
Shares of lululemon athletica (NASDAQ: LULU) are up over 13% in pre-open Thursday after the company delivered stronger-than-expected Q2 results.
LULU said it made a profit of $1.65 per share to easily top the $1.18 consensus. Revenue came in at $1.5 billion, again higher than the $1.33 consensus.
"Our second quarter results demonstrate the continued momentum across the business, and how we are living into our Power of Three growth plan and Impact Agenda commitments. We launched exciting new products, experienced strength across channels and geographies, and announced new partnerships that will allow us to become a leader in product sustainability." Calvin McDonald, Chief Executive Officer, stated.
For the ongoing quarter, LULU is projecting EPS of $1.355 at the midpoint of the guidance, higher than the $1.32 consensus. Revenue for the quarter is seen at $1.415 billion versus the consensus of $1.32 billion.
On a full-year basis, LULU is looking for EPS of $7.43, versus the consensus of $6.91. Full-year revenue is seen at $6.225 billion, again higher than the consensus of $5.94 billion.
Goldman Sachs analyst Brooke Roach reiterated a Buy rating and a $480.00 per share price target as the brand continues to fire on all cylinders.
“We come away from F2Q21 results with increased conviction in LULU’s brand momentum and see a credible path to continued market share capture. F2Q results cycled a particularly tough compare, and the company’s top line results demonstrated accelerating momentum (164% sales growth vs. 2019, or a 28% 2-yr CAGR). We were encouraged by a sequential improvement in store productivity (now in line with 2019 levels), healthy growth in the digital business despite lower promotions (up 4% Y/Y and a 66% 2-yr CAGR), all at higher gross and operating profit margins,” Roach wrote in a note sent to clients.
“Net, the company is on track to exceed their long-term targets (2023) by the end of this year. As we look ahead, we see sustained opportunity for LULU to continue to grow in their core markets, extend wallet share among women, grow customer count in men’s, and drive scale and margin leverage internationally. While we do see some near-term challenges, including industry-wide supply chain headwinds (which weigh on top line and gross margins), and margin pressure from Mirror integration, we believe this is more than offset by solid core business results and strategic customer engagement initiatives,” Roach concludes.
Similarly, Stifel analyst Jim Duffy raised the price target on the Buy-rated LULU to a new Street-high of $500.00 per share. He said that Q2 results showed the company’s flexibility to overcome supply challenges.
“2Q results and strong guidance emphatically demonstrate LULU brand momentum and post pandemic lock-down relevance. The FY2H guide topped prevailing consensus and implies an impressive low/mid-20%’s 2 yr. CAGR. While this suggests a deceleration from the 28% 2 yr. CAGR in FY2Q, it is well better than feared given supply challenges from COVID related production disruption in Vietnam. Supply challenges may linger into FY22 though any missed sales and airfreight burden are ultimately transitory and create easier compares. We are raising FY21 and FY22 estimates, introducing estimates for FY23 and raising our 12 mos. TP to $500 reflecting a 45X multiple on our FY23 EPS estimate of $11.11 (prior $445 target = 51X FY22 of $8.75),” Duffy said in a note.