Shares surge 7% to all-time intraday high before paring gains
Shares of Lululemon Athletica Inc. ran up to a record high Thursday, before paring some gains, as Wall Street analysts praised the yoga gear maker’s results en masse.
Of the 34 analysts surveyed by FactSet, at least 21 raised their stock-price targets, after the company’s better-than-expected fiscal first-quarter results and raised guidance. The average new price target of $191.71, which is up from $186.39 at the end of May, is 10.2% above current levels.
Lululemon LULU, +2.12% reported late Wednesday that net income for the quarter to May 5 that rose to $96.6 million, or 74 cents a share, from $75.2 million, or 55 cents a share, in the same period a year ago. That beat the FactSet consensus of 70 cents a share.
Revenue grew 20% to $782.3 million, above the FactSet consensus of $756.1 million, as same-store sales growth of 14.0% beat expectations of 11.5%. The company said in its post-earnings conference call with analysts, according to a transcript provided by FactSet, that it saw growth across all its channels, highlighted by 26% growth in comparable sales in its men’s business, a 35% increase in its digital business and nearly 70% market growth in China.
The company raised its full-year earnings-per-share guidance range to $4.51 to $4.58 from $4.48 to $4.55 and its revenue outlook to $3.73 billion to $3.77 billion from $3.70 billion to $3.74 billion.
The stock shot up as much as 7.0% in intraday trading to an all-time high of $182.89, which was 2.4% above the May 3 record close of $178.64, before paring some gains to be up 1.4% in afternoon trading.
Analyst Sam Poser at Susquehanna wrote in a note to clients that after the “exceptional” results, Lululemon remains the “premiere retailer in our (and likely any) coverage universe.” He said there is more room for the stock to run, as there are no signs that momentum is slowing. He reiterated the positive rating he’s had on the stock since September 2017 and his $210 stock price target.
Lululemon shares have not run up 42% year to date, while the SPDR S&P Retail exchange-traded fund XRT, +1.22% has gained 2.9% and the S&P 500 indexSPX, +0.41% has advanced 15%.
Oppenheimer analyst Brian Nagel reiterated his outperform rating and $225 stock price target, which is the second-highest among analysts surveyed by FactSet.
“For a while, we have highlighted [Lululemon] as a key market share grabber and innovator within athleisure and one of the most compelling growth stories in all of consumer,” Nagel wrote. “Last night’s report from [Lululemon] goes a long way in helping to support our positive thesis on the company and its shares.”
Even analyst Edward Yruma at KeyBanc Capital, who rates Lululemon sector weight, used words like “powerful” and “impressive” to describe the earnings report, as the company managed to show strong same-store sales growth despite difficult comparisons — they rose 20% a year ago — and weather and industry challenges that hurt other retailers.