Why Lululemon Stock Is Up By 8% Today

Key Insights

  • Lululemon’s quarterly earnings beat analyst estimates.
  • The company’s board approved a $1 billion stock buyback plan.
  • The stock’s rich valuation remains the key concern for traders.

Lululemon Stock Rallies After Strong Quarterly Report

Shares of Lululemon gained strong upside momentum after the company released its quarterly results. Lululemon reported revenue of $2.13 billion and adjusted earnings of $3.37 per share, meeting analyst estimates on revenue and beating them on earnings.

The company noted that its comparable store sales increased by 32% on a year-over-year basis, while direct-to-consumer net revenue grew by 17%.

As Lululemon’s performance was strong, the company’s board of directors approved a new stock repurchase program of up to $1.0 billion worth of Lululemon shares.

In the first quarter of 2022, Lululemon expects to report revenue of $1.525 billion – $1.55 billion. First-quarter earnings are expected at $1.38 – $1.43 per share.

What’s Next For Lululemon Stock?

Analysts expect that Lululemon will report earnings of $9.06 per share in the current fiscal year, so the stock is trading at more than 40 forward P/E.

It should be noted that analyst estimates for Lululemon stock have been moving lower in recent weeks, but this trend may change after the release of the strong earnings report.

In case analyst estimates start to move higher, Lululemon stock may get more support. The buyback announcement should also provide additional support to Lululemon stock.

In the longer term, the key question is whether the market is ready to tolerate valuations above 40 forward P/E at a time when Treasury yields are rising fast. At this point, the market is enthusiastic despite rising yields and geopolitical tensions, but it remains to be seen whether traders will stay bullish when the Fed begins to reduce the size of its balance sheet.

Lululemon stock has already managed to get from the $280 level to the $370 level in just two weeks, so the risks of a pullback are increasing as some traders would like to take some profits off the table after the strong rally.

For a look at all of today’s economic events, check out our economic calendar.

When Will S&P500 Find Direction?

I’ve heard a lot of technical talk that the S&P 500 could slosh around in this 4,200 to 4,600 range until it finds new direction.

Ukraine is still in the focus

The focus lately has been the war in Ukraine and the Federal Reserve, both of which continue to exacerbate investor uncertainty. While Russia shows no signs of backing off in Ukraine, there hasn’t been too much change on the ground as Putin’s assault seems to have stalled on several fronts.

In fact, some reports indicate Russia has actually lost a bit of ground in some areas. A few military and political experts say they see hopeful signs in a prisoner exchange that Ukraine and Russia conducted this week, though others remain skeptical that Putin is no where ready to strike a peace deal.

Many experts in the space say the biggest worry is with Putin’s army failing to meet his objectives, he could turn to other even more deadly tactics. The U.S. and EU have been more vocal with their warnings to Russia this week that the use of chemical or biological weapons will bring a strong response from the West. No details have been provided on what that might be and officials behind the scenes have said they are being “deliberately ambiguous” in order to keep Putin off-guard.

Can Fed control the inflation?

As for the Fed, fears are again rising that the central bank will not be able to cool inflation without damaging the economy, particularly with the additional challenges the war has created.

Fed watchers will get a slew of new data to chew on next week, including the PCE Pries Index next Thursday, which is one of the Fed’s favorite inflation gauges. The year-over-year rate in January rose to +5.2% from a previous +4.9% and most expect it will rise again in the February read.

With the Russia-Ukraine conflict compounding the raw materials crunch and Covid lockdowns in China showing signs of jamming up supply chains again, whatever the gauge shows next Thursday, it will likely climb higher in the months ahead. Investors get a look at the U.S. labor market next Friday with the March Employment Report. Consensus is calling for a gain of around +500,000 jobs after a gain of over +675,000 in February.

Investors will be focused more on the wage component which came in flat in January. That helped bring the year-over-year rate down a bit but wages were still up more than +5% vs. February 2021.

Wage inflation is very “sticky” so the higher labor costs climb, the more it limits how much price gains can ultimately moderate.

Data to watch

Other data next week includes advance reads on International Trade, Retail Inventories, and Wholesale Inventories on Monday; the S&P Case-Shiller Home Price Index and Consumer Confidence on Tuesday; the ADP Employment Change and final estimate of Q4 GDP on Wednesday; Personal Income and Outlays and Chicago PMI on Thursday; and ISM Manufacturing and Construction Spending on Friday.

On the earnings front, highlights next week include Chewy, Concentrix, Lululemon, and Micron Technology on Tuesday; BioNTech and Paychex on Wednesday; and Walgreens on Thursday. Russia’s war in Ukraine and the Fed’s war against inflation should remain in the spotlight…

The Big Food Worry… There’s no question food-importing nations are going to feel some major pain. In the USA prices at the grocery store more than likely continue even higher. The world is screaming for more acres and more production but supply chain dislocations along with Russia’s war in Ukraine has fertilizer and input prices sky-high and in some nations in extremely short supply.

Best Oversold Stocks to Buy for March 2022

Stocks are still getting slammed in 2022, especially technology stocks. Of the tech stocks my research firm MAPsignals follows, nearly all the recent activity has been selling (a whopping 92% of all tech signals):

See the red bars? Those are stocks we believe are getting sold. When red bars run rampant, good names can get crushed. They can become what I call “oversold.” When this happens, even great stocks can get caught in the selling rush – and that can mean opportunity.

There are some great stocks being sold right now (not all in tech either). They’re fundamentally sound companies with good histories, which means discounts for long-term investors. Here are five stocks seeing lots of red that appear to be near-term oversold: CRM, INTU, LULU, MNST & AMD.

Up first is Salesforce.com Inc. (CRM), the enterprise customer management software platform.

Even though great companies’ stocks can be volatile, like CRM over the past year, they’re worthy of attention, especially on pullbacks. Check out Salesforce:

  • 1-month performance (-12.9%)
  • Recent Big Money sell signals

To show you what our Big Money signals look like on a stock, have a look at all the buys (green bars) and sells (red bars) in CRM over the past year:

Clearly, that’s a lot of red, especially this year.

Looking more broadly, Salesforce has been a high-quality stock for years. The blue bars in the chart below show when CRM was likely being bought by a Big Money player and also a high-ranking stock, according to MAPsignals.

When you see a lot of blue, like CRM did in 2017, 2018, and 2020, it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Money buying and strong fundamentals. As you can see, Salesforce’s sales and earnings numbers have been super strong, making it worthy of attention:

  • 3-year sales growth rate (+26.6%)
  • 3-year EPS growth rate (+1,161.0%)

Next up is Intuit Inc. (INTU), the financial management software maker.

Check out these technicals for INTU:

  • Year-to-date performance (-25.2%)
  • Recent Big Money sell signals

It’s been getting sold a lot recently:

But now let’s look long-term. These are the top buy signals Intuit has made since 2017. The Big Money has been on it for a while:

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Intuit has had rock-solid, double-digit growth in earnings and sales:

  • 3-year EPS growth rate (+17.5%)
  • 1-year sales growth rate (+25.4%)

Another growth name is Lululemon Athetlica Inc. (LULU), the athletic clothing company.

Strong candidates for growth usually have Big Money buying the shares. Lululemon has historically had that. But recently, it’s full of red, which could be an opportunity:

  • Year-to-date performance (-21.1%)
  • Historical Big Money signals

Below are the blue Big Money signals LULU has made since 2015. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s dig deeper. Lululemon’s growth in earnings is impressive, as is its sales growth. I expect more of the same in the coming years.

  • 3-year EPS growth rate (+39.6%)
  • 3-year sales growth rate (+18.6%)

Number four on the list is Monster Beverage Corporation (MNST), which is an energy drink company.

Here are the technicals important to me:

  • 1-month performance (-6.3%)
  • Historical Big Money signals

Recently, it’s been a steep downward slide, with more Big Money selling than buying:

But Monster Beverage is a cash magnet and Big Money favorite. Below are the Big Money Top 20 buy signals for MNST since 2015:

Source: www.MAPsignals.com

Let’s look under the hood. Despite the price slide, Monster Beverage has been growing earnings and sales at double-digit rates:

  • 3-year EPS growth rate (+22.6%)
  • 3-year sales growth rate = (+10.9%)

Our last growth candidate is Advanced Micro Devices, Inc. (AMD), a maker of powerful semiconductor chips. Like most technology stocks, it’s been getting beaten up this year:

Check out these technicals:

  • 1-month performance (-13.7%)
  • Historical Big Money signals

AMD is a high-quality stock since it’s made the Top 20 report. As you can see below, it’s been a Big Money favorite for years. Right now, it’s on a pullback and could be an opportunity.

Source: www.MAPsignals.com

Now let’s look below the surface a bit. Earnings have been skyrocketing, and there’s been big sales growth too:

  • 3-year EPS growth rate = (+196.2%)
  • 3-year sales growth rate = (+39.1%)

The Bottom Line

CRM, INTU, LULU, MNST & AMD represent the top oversold stocks for March 2022. They’ve been sold a lot lately…perhaps too much. Strong, fundamentally-sound stocks seeing near-term sell signals are worthy of extra attention because of their long-term potential.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in CRM, INTU & LULU in personal accounts and INTU & LULU in managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

Shares of Yoga Wear Maker Lululemon Tumble After It Warns of Omicron’s Impact on Q4 Results

Lululemon’s shares plunged nearly 7% in pre-market trading on Monday after the Vancouver-based healthy lifestyle-inspired athletic retailer warned its fourth-quarter earnings and revenue will be hit by the Omicron variant of the coronavirus.

The apparel retailer expects the company’s net revenue to be toward the low end of its range of $2.125 billion to $2.165 billion, and diluted earnings per share and adjusted diluted earnings per share to be toward the low end of its ranges of $3.24 to $3.31 and $3.25 to $3.32, respectively.

Not only Lululemon, everyone has been affected by the Omicron virus, and this is hurting the retail sector at large, which is already dealing with a strained supply chain.

Following this, Lululemon shares plunged nearly 7% to $332 in pre-market trading on Monday. The stock rose over 12% in 2021.

Executive Comments

“We are closing out a strong 2021 in the coming weeks, and we’re pleased with how lululemon has delivered over the course of the year. We started the holiday season in a strong position but have since experienced several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations. I am proud of how our teams continue to deliver for our guests, and we are excited about what the future holds for lululemon,” noted Calvin McDonald, Chief Executive Officer.

Analyst Comments

Lululemon (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

Lululemon Stock Price Forecast

Sixteen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $467.44 with a high forecast of $530.00 and a low forecast of $344.00.

The average price target represents a 31.60% change from the last price of $355.21. From those 16 analysts, 11 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $283 with a high of $524 under a bull scenario and $244 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Several other analysts have also updated their stock outlook. Truist Securities initiated coverage with a hold rating and set the target price at $435. MKM Partners raised the target price to $485 from $468. Deutsche Bank cut the target price to $484 from $486. JPMorgan lowered the target price to $518 from $570.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator is giving a mixed signal.

Check out FX Empire’s earnings calendar

Earnings Week Ahead: AutoZone, Campbell Soup, Lululemon and Broadcom in Focus

Earnings Calendar For The Week Of December 6

Monday (December 6)

Ticker Company EPS Forecast
SAIC Science Applications International $1.49
MDB MongoDB Inc -$0.38

 

Tuesday (December 7)

IN THE SPOTLIGHT: AUTOZONE

The Memphis, Tennessee-based auto parts retailer AutoZone is expected to report earnings per share of $20.78 in the fiscal first quarter, which represents year-over-year growth of about 12% from $18.61 per share seen in the same period a year ago.

The company, which is a major retailer and distributor of automotive replacement parts and accessories, is on track to beat earnings per share estimates again after having beaten it for 12 consecutive quarters. The company is expected to post revenue growth of about 6% to $3.33 billion.

The company is expected to earn $97.73 per share and generate $14.81 billion in revenue for the entire fiscal year, according to Zacks Research. These results demonstrate increases of 2.67 % and 1.22 % over last year, respectively.

“We see AutoZone (AZO) as a high-quality retailer with the ability to compound earnings/FCF growth over time. While not immune to a tougher macro backdrop (fewer miles driven), we believe AZO is best positioned through any recession given its leading exposure to the more defensive DIY segment (~80% of sales),” noted Simeon Gutman, equity analyst at Morgan Stanley.

“In addition, its DIFM growth was accelerating pre-COVID-19 and we think it can gain more share in that segment going forward. In our view, ongoing share gains coupled with solid expense management should allow AZO to overcome headwinds from less driving in the near- to medium-term. These advantages seem priced in currently.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 7

Ticker Company EPS Forecast
AZO AutoZone $20.71
AHT Ashtead Group £0.62
S Sprint -$0.18
TOL Toll Brothers $2.48
CASY Casey’s General Stores $2.79
HRB H&R Block -$0.94

 

Wednesday (December 8)

Ticker Company EPS Forecast
UNFI United Natural Foods $0.58
KFY Korn Ferry International $1.37
THO Thor Industries $2.70
RH Restoration Hardware $6.62
GEF Greif $1.47
GME GameStop -$0.52
CPB Campbell Soup $0.81

 

Thursday (December 9)

IN THE SPOTLIGHT: LULULEMON ATHLETICA, BROADCOM

LULULEMON: The Vancouver-based healthy lifestyle-inspired athletic retailer is expected to report its fiscal third-quarter earnings of $1.40 per share, which represents year-over-year growth of over 20% from $1.16 per share seen in the same period a year ago.

The apparel retailer would post year-over-year sales growth of about 28% to $1.43 billion. In the last two years, the company has beaten earnings per share (EPS) estimates most of the time.

Sales are expected to be $1.4-$1.43 billion in the third quarter of fiscal 2021, representing a two-year CAGR of 24-25%. The gross margin is expected to increase 50-100bps compared to the second quarter of fiscal 2019. The company expects adjusted earnings to be between $1.33 and $1.38 per share, compared with $1.16 in the prior-year quarter and 96 cents in the third quarter of fiscal 2019, according to ZACKS Research.

Net revenues are expected to reach $6.19-$6.26 billion for fiscal 2021 compared with $5.83-$5.91 billion earlier. Earnings per share will be $7.38-$7.48 versus $6.73-$6.86 previously mentioned.

Lululemon Athletica (LULU) is a long-term topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

BROADCOM: The chipmaker and software infrastructure supplier is expected to report its fiscal fourth-quarter earnings of $7.74 per share, which represents year-over-year growth of over 21% from $6.35 per share seen in the same period a year ago. The semiconductor manufacturer would post revenue growth of nearly 14% to $7.35 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 9

Ticker Company EPS Forecast
SMDS Ds Smith £16.10
FIZZ National Beverage $0.50
HRL Hormel Foods $0.50
CIEN Ciena $0.86
ORCL Oracle $1.11
LULU Lululemon Athletica $1.40
AVGO Broadcom Inc $7.74
MTN Vail Resorts -$3.66
COST Costco Wholesale $2.57

 

Friday (December 10)

No major earnings are scheduled for release.

Lululemon’s Q3 Earnings to Rise over 20%, Stock Is Well Worth Watching

The Vancouver-based healthy lifestyle-inspired athletic retailer Lululemon Athletica is expected to report its fiscal third-quarter earnings of $1.40 per share, which represents year-over-year growth of over 20% from $1.16 per share seen in the same period a year ago.

The apparel retailer would post year-over-year sales growth of about 28% to $1.43 billion. In the last two years, the company has beaten earnings per share (EPS) estimates most of the time.

Sales are expected to be $1.4-$1.43 billion in the third quarter of fiscal 2021, representing a two-year CAGR of 24-25%. The gross margin is expected to increase 50-100bps compared to the second quarter of fiscal 2019. The company expects adjusted earnings to be between $1.33 and $1.38 per share, compared with $1.16 in the prior-year quarter and 96 cents in the third quarter of fiscal 2019, according to ZACKS Research.

Net revenues are expected to reach $6.19-$6.26 billion for fiscal 2021 compared with $5.83-$5.91 billion earlier. Earnings per share will be $7.38-$7.48 versus $6.73-$6.86 previously mentioned.

Lululemon’s shares closed 1.3% lower at $448.43 on Wednesday. The stock surged nearly 30% so far this year.

Lululemon Stock Price Forecast

Seventeen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $484.41 with a high forecast of $570.00 and a low forecast of $410.00.

The average price target represents an 8.02% change from the last price of $448.43. From those 17 analysts, 14 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $310 with a high of $528 under a bull scenario and $230 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Several other analysts have also updated their stock outlook. B. Riley raised the target price to $548 from $466. Deutsche Bank lifted the target price to $486 from $474. BMO upped the target price to $344 from $275.

Technical analysis suggests it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst Comments

Lululemon Athletica (LULU) is a long-term topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

Best Growth Stocks November 2021

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are FB, SWKS, LOGI, LULU, & MRVL.

For MAPsignals, we believe that Big Money trading can alert you to the forward fundamental picture of a stock. We want the odds on our side when looking for the highest quality stocks.

Up first is Facebook, Inc. (FB), which is the social media leader.

Great companies on pullbacks are worthy of attention. Check out FB:

  • 1 month performance (-4.42%)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at the top buy signals Facebook has made the past few years.

Blue bars are showing that FB was likely being bought by a Big Money player according to MAPsignals.

When you see a lot of them, I call it the stairway to heaven:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

But, what about fundamentals? As you can see, Facebook’s revenue numbers have been strong:

  • 3-year sales growth rate (+28.5%)
  • 3-year earnings growth rate (+27.3%)

Next up is Skyworks Solutions, Inc. (SWKS), which is a leading semiconductor firm.

Check out these technicals for SWKS:

  • 1 month performance (-3.34%)
  • Historical big money signals

Let’s look long-term. These are the top buy signals Skyworks has made since 2015. Clearly the Big Money has been consistent for years:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Skyworks has had stagnant growth. I see that changing in the years to come:

  • 3-year sales growth rate = -2.46%
  • 3-year earnings growth rate = -4.05%

Another growth name is Logitech International S.A. (LOGI), which is a leading camera maker.

Strong candidates for growth usually have big money buying the shares. Logitech has that. Also, the stock has pulled back recently:

  • 1 month performance (-4.79%)
  • Historical Big Money signals

Below are the big money signals Logitech has made since 2015. That’s juice!

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now let’s look under the hood. Logitech’s sales growth is impressive. I expect more growth in the coming years:

  • 3-year sales growth rate = +30.6%
  • 3-year earnings growth rate = +68.1%

Number 4 on the list is Lululemon Athletica Inc. (LULU), which is a leading fitness wear company.

Here are the technicals important to me:

  • 1 month performance (-.69%)
  • Historical big money signals

Below are the big money signals for LULU since 2015:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Let’s look under the hood. Lululemon has been growing nicely:

  • 3-year sales growth rate = +18.58%
  • 3-year earnings growth rate = +39.56%

Our last growth candidate is Marvell Technology Group Ltd. (MRVL), which is another leading semiconductor firm.

Check out these technicals:

  • YTD performance (+11.92%)
  • Historical big money signals

Marvell is a high-quality stock since it’s made my Top 20 report:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now look under the hood. Earnings hasn’t been growing, but I expect that to change going forward:

  • 3-year sales growth rate = +7.7%
  • 3-year earnings growth rate = -126.1%

The Bottom Line

FB, SWKS, LOGI, LULU, & MRVL represent top growth stocks for November 2021. Strong fundamentals and big money buy signals make these stocks worthy of extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in SWKS & LULU in personal accounts and long positions in SWKS, LOGI, & LULU in managed accounts.

Investment Research Disclaimer

Best Stocks to Buy Now October 2021

The hard part is finding them.

At MAPsignals, that’s where we focus.

And this month we look at my best stocks to buy now for October 2021. Keep in mind, I like to use a lot of data in my process and this isn’t personalized advice.

For MAPsignals, we focus on Big Money buying the best stocks. We find that oftentimes how a stock trades can alert you to the forward fundamental picture more than just looking at a company’s financials. I like the odds in my favor when looking for the highest quality stocks.

Up first is Analog Devices, Inc. (ADI), which is a leading semiconductor company. They have been trucking higher for years.

When we decide on the strongest candidate for long-term growth, we consider many fundamental and technical considerations.

Here we see good 3-year sales and earnings growth. Just for fun, juice is good, so-so is ok, and not ideal is underwhelming:

TextDescription automatically generated
Source: MAPsignals, FactSet

To see if Big Money is plowing in, we can look at the times when ADI was a top ranked stock. Below are all the top buy signals ADI has made the past few years. Blue bars are showing that Analog Devices was likely being bought by a Big Money player according to MAPsignals.

When we see a lot of blue signals, we call it the stairway to heaven:

Chart, histogramDescription automatically generated
Source: MAPsignals.com

Next up is Celsius Holdings, Inc. (CELH), which is a leading energy drink maker.

Let’s take a peek under the hood:

Graphical user interface, textDescription automatically generated with medium confidence
Source: MAPsignals, FactSet

The stock has been a rocket. These are the top buy signals CELH has made since 2020. Clearly the Big Money has been into it:

Chart, histogramDescription automatically generated
Source: MAPsignals.com

Another growth name to consider is Lululemon Athletica, Inc. (LULU). They are a leader in athletic wear.

Looking at the fundamental picture we see a strong sales and 3-year earnings growth and a chunky profit margin:

Graphical user interface, textDescription automatically generated
Source: MAPsignals, FactSet

Below are the big money signals Lululemon has made since 2015. This stock has been a magnet for Big Money. Recently they had an awesome earnings report:

Chart, histogramDescription automatically generated
Source: MAPsignals.com

Number 4 on the list is IHS Markit Ltd. (INFO), which is a leading analytics firm.

Check out the fundamental picture. For HIS Markit we see lots of earnings growth:

TextDescription automatically generated with medium confidence
Source: MAPsignals, FactSet

Below are the big money signals that INFO has made since 2015. That’s a beauty!

Chart, histogramDescription automatically generated
Source: MAPsignals.com

Our last growth powerhouse is Crocs, Inc (CROX), which makes iconic clogs.

This company boasts double-digit 1 and 3-year sales growth. A gross profit margin of 53% is awesome.

Graphical user interface, textDescription automatically generated with medium confidence
Source: MAPsignals, FactSet

Below are the big money signals Crocs has made since 2015. You can see how powerful the performance has been:

Chart, histogramDescription automatically generated
Source: MAPsignals.com

The Bottom Line

ADI, CELH, LULU, INFO, & CROX represent my best stocks to buy now for October 2021. Given the strong historical revenue & earnings growth, and multiple big money buy signals, these stocks could be worth extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in ADI & LULU in managed accounts. He holds no positions in CELH, INFO, or CROX at the time of publication.

Investment Research Disclaimer

Nike Shares Fall on Global Supply Chain Woes

Supply chain problems have wreaked havoc on companies around the world over the past year. The pandemic-fueled global supply chain issues have thrown a wrench into the operations of companies across sectors.

Worse, global supply chain problems are not going to subside anytime soon, according to high-profile economist Mohamed El-Erian. He predicts that supply chain constraints will stick around for another one to two years, or longer. This is a setback for companies like Nike that are right in the middle of the supply chain disruption.

Wall Street firm BTIG is not optimistic and has downgraded Nike’s stock from buy to neutral as a result. Shares of Nike tumbled more than 2% in response to the downgrade.

Nike’s stock is hovering below its all-time high of $174 and currently trades for just below $160. Investors who believe that Nike will weather the storm and use its pricing muscle to mitigate the damage might see the downturn as a buying opportunity, though it’s unclear where the bottom might be.

Factory Fears

BTIG’s bombshell downgrade was in response to factories in Vietnam that were forced to be shut down due to the spread of the virus, which has had a ripple effect on the supply chain.  BTIG analyst Camilo Lyon wrote in a report,

“We believe the risk of significant cancellations beginning this holiday and running through at least next spring has risen materially for NKE as it is now facing at least two months of virtually no unit production at its Vietnamese factories.”

The factories in question comprise more than half of Nike’s footwear production and nearly one-third of apparel items. The timing couldn’t be worse, with the holiday season right around the corner and vaccinations becoming more prevalent so that retail sales could benefit.

Vietnam is suffering from another wave of the pandemic, particularly in Ho Chi Minh City, which has triggered restrictions in the economy and crippled the manufacturing sector.  A mere 5% of Vietnam’s population has been vaccinated from COVID-19.

Nike Not Alone

While Nike’s issues might begin in Vietnam, the supply chain disruption is a global problem. As a result, other brands are feeling it too. Athletic apparel company Lululemon, for example, experienced a 61% jump in Q2 revenue, but the supply chain is still a worry. They similarly source a good chunk of their apparel from Vietnam and are having to scramble as a result. Nonetheless, Lululemon has a strong sales outlook for 2021.

Lululemon’s Q2 Earnings to Rise 60%, Revenue to Jump 50%

The Vancouver-based retailer healthy lifestyle-inspired athletic retailer Lululemon Athletica is expected to report its fiscal second-quarter earnings of $1.18 per share, which represents year-over-year growth of about 60% from $0.74 per share seen in the same period a year ago.

The apparel retailer would post year-over-year sales growth of about 50% to $1.34 billion.

“For second-quarter fiscal 2021, it expects net sales of $1.3-$1.33 billion, indicating a two-year CAGR growth of 21-23%. The company currently has 93% of its stores open. On a two-year CAGR basis, it expects flat in-store sales, whereas e-commerce sales are anticipated to increase 55%,” noted analysts at ZACKS Research.

“However, the company anticipates e-commerce sales in the fiscal second quarter to decline modestly from the prior-year quarter, as it laps the height of COVID-related channel shifts and online warehouse sales. Nonetheless, it expects e-commerce sales to increase modestly in the fiscal third and fourth quarters.”

Lululemon Athletica shares have surged over 11% so far this year. The stock closed nearly flat at $388.33 on Friday. The U.S. financial markets will be closed for Labor Day on Monday, September 6.

Analyst Comments

Lululemon Athletica (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

Lululemon Athletica Stock Price Forecast

Nine analysts who offered stock ratings for Lululemon Athletica in the last three months forecast the average price in 12 months of $441.00 with a high forecast of $466.00 and a low forecast of $405.00.

The average price target represents a 13.56% change from the last price of $388.33. From those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $300 with a high of $521 under a bull scenario and $213 under the worst-case scenario. The firm gave an “Equal-weight” rating to the athletic apparel company’s stock.

Several other analysts have also updated their stock outlook. B.Riley raised the target price to $466 from $370. Telsey Advisory Group lifted the target price to $460 from $440. Deutsche Bank upped the price target to $436 from $401.

Check out FX Empire’s earnings calendar

The Biggest Risk To Economic Growth. Should You Still Buy The Dip?

In fact, the all-time record for new highs in one year is 77, set in 1995. Trend watchers note that 2021 is only the 11th time since 1928 that the S&P 500 has rallied +20% or more during the first 8 months of the year. In all but the two big market crash years of 1929 and 1987, the S&P 500 managed to hold a solid double-digit gain into year-end, according to Bank of America research.

Bears vs bulls

Bears, however, are quick to point out that the S&P 500 hasn’t had a pullback of at least -5% or more during the entire climb higher this year, something that generally happens about three times a year. Typically, corrections of -5% to -10% are considered healthy. Bears of course believe stocks are wildly overvalued due in large part to the Federal Reserve’s monetary supports and “easy money”. Once the Fed starts reducing its asset purchases and lifting interest rates, bears believe investors will take a more “risk off” attitude and the bull rally in stock markets will correct to some degree.

Overall, bulls seem comfortable with the Fed beginning its asset purchase “taper” later this year and that is partially due to Fed Chair Jerome Powell’s insistence that the economy “still has much ground to cover” before rate hikes are on the table. Bulls are also anticipating a second shot at a “reopening boom” after the current wave of coronavirus has passed. Remember, this wave cut short the Covid-free summer spending surge that everyone had been anticipating so bulls believe this pent-up demand is going to be spent in the quarters ahead.

What to watch?

The biggest risk to economic growth right now is not on the demand side but rather on the supply side as shortages for everything across the board are limiting the amount of goods and services available. Demand amid the summer Covid surge has cooled a bit, which may be a good thing in the long run as it’s given some manufacturers a minute to catch up. And again, bulls believe this is creating just another layer of pent up demand that consumers will satisfy down the road.

Turning to next week, remember that U.S. stock, bond, and commodity markets are closed on Monday, September 6 for the Labor Day holiday. The short week will also be light on data with just the Fed’s Beige Book and July Consumer Credit on Wednesday, and the Producer Price Index on Friday. Next week’s earnings will include Casey’s General Store, Lululemon, GameStop, Oracle, Z-Scaler, Academy Sports, and Kroger to name a few.

SP500 analysis

Sp500 rallied despite weak NFP. There is only one reason for such reaction – the Federal Reserve still cannot move to tighten monetary policy. However, the Cycles forecast the best buying dip opportunity in October if other conditions will be there. We certainly can’t judge now if it is going to be conformed by other tools.

sp500 cycles september 2021

We have bearish ADL divergence on a daily chart and potentially it will play well and create a buying opportunity in October. However, I have to say there is still good accumulation in this market. So, I believe if this market gives a sell signal in September, traders should cash out their positions quite quickly. We are in a strong bull trend and so far all fundamentals still support the stock market.

ES ##-## (Daily) 2021_09_06 (2_51_28 AM)

Weekly Earnings Preview: GameStop, Lululemon Athletica, Oracle and Kroger in Focus

Earnings Calendar For The Week Of September 6

Monday (September 6)

Ticker Company EPS Forecast
DPH Dechra Pharma £47.90
SMAR Smartsheet Inc. -$0.13
SUMO Sumo -$0.14

Tuesday (September 7)

Ticker Company EPS Forecast
CASY Casey’s General Stores $2.99

Wednesday (September 8)

IN THE SPOTLIGHT: GAMESTOP, LULULEMON ATHLETICA

GAMESTOP: The world’s largest multichannel video game retailer is expected to report its fiscal second-quarter loss of -$0.67 per share, an improvement from a loss of -$1.40 per share seen in the same period a year ago.

The Grapevine, Texas-based company would post year-over-year revenue growth of about 20% year-on-year to around $1.1 billion. EPS estimates have been exceeded twice in the last four quarters.

LULULEMON ATHLETICA: The Vancouver-based retailer healthy lifestyle-inspired athletic retailer is expected to report its fiscal second-quarter earnings of $1.18 per share, which represents year-over-year growth of about 60% from $0.74 per share seen in the same period a year ago. The apparel retailer would post year-over-year sales growth of about 50% to $1.34 billion.

Lululemon Athletica (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 8

Ticker Company EPS Forecast
DNLM Dunelm Group £3.00
KFY Korn Ferry International $1.07
CPRT Copart $0.91
GME GameStop -$0.67
RH Restoration Hardware $6.48
ABM ABM Industries $0.81
AVAV AeroVironment -$0.24
LULU Lululemon Athletica $1.18

Thursday (September 9)

IN THE SPOTLIGHT: ORACLE

The world’s largest database management company is expected to report its fiscal first-quarter earnings of $0.97 per share, which represents year-over-year growth of over 4% from $0.93 per share seen in the same period a year ago. The Austin, Texas-based computer technology corporation would post revenue of $9.8 billion.

Oracle‘s current low valuation at ~16.7x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“With management guiding to mid-single-digit CC revenue growth in a software sector filled with strong secular growth stories, and operating margins declining in FY22 due to heightened investment in Cloud, we remain Equal-weight while our price target moves up to $77.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 9

Ticker Company EPS Forecast
MRW Morrison Supermarkets £5.77
ASO Avesoro Resources $1.38
VRNT Verint Systems $0.42
FIZZ National Beverage $0.52

Friday (September 10)

IN THE SPOTLIGHT: KROGER

Kroger, one of the world’s largest food retailers, is expected to report its fiscal second-quarter earnings of $0.64 per share, which represents a year-over-year decline of over 12% from $0.73 per share seen in the same period a year ago.

The retailer, which operates over 2,500 supermarkets in the U.S., would post revenue of 30.4 billion, down about -0.3% year on year. However, it is worth noting that in the last four quarters, on average, the company has beaten earnings estimates over 21%.

Lululemon Tops Q1 Earnings and Revenue Estimates; Target Price $396

The Vancouver-based retailer healthy lifestyle-inspired athletic retailer Lululemon reported better-than-expected earnings and revenue in the first quarter of the fiscal year 2021 and expects full-year net revenue and profit higher than the analysts’ expectations.

The apparel retailer’s net revenue jumped 88% year on year to $1.23 billion, beating the Wall Street consensus estimates of $1.13 billion. Excluding items, Lululemon’s earnings per share came in at $1.16, higher than the market expectations of $0.91 per share.

Lululemon forecasts net revenue in the range of $1.300 billion to $1.330 billion for the second quarter of 2021. Diluted earnings per share are expected to be in the range of $1.05 to $1.10 for the quarter and adjusted diluted earnings per share are expected to be in the range of $1.10 to $1.15.

For full-year 2021, Lululemon forecasts net revenue in the range of $5.825 billion to $5.905 billion. Diluted earnings per share are expected to be in the range of $6.52 to $6.65 for the year and adjusted diluted earnings per share are expected to be in the range of $6.73 to $6.86.

Lululemon shares fell 1.07% to $317.36 on Thursday. The stock slumped about 9% so far this year.

Analyst Comments

“1Q results up big against easy compares. Stores are open again, int’l up >100% and ecom up 50%. These are great trends and should continue. However, we believe the strength in results is baked into valuation at this point,” noted Randal J. Konik, equity analyst at Jefferies.

“Moreover, we continue to believe Mirror and ’22 footwear launch will be dilutive to the P&L which could present issues if the core apparel biz slows. As a result, we believe LULU shares will stay flat, and prefer to buy NKE and UAA shares.”

Lululemon Stock Price Forecast

Fifteen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $396.67 with a high forecast of $465.00 and a low forecast of $330.00.

The average price target represents a 24.99% increase from the last price of $317.36. Of those 15 analysts, 12 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $278 with a high of $476 under a bull scenario and $138 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Lululemon (LULU) delivered another quarter of revenue & EPS results above Street expectations, with some items accelerating from pre-COVID-19 levels. We view raised guidance as conservative, but suspect Street estimates only climb to the high end of the new EPS range. Leave 1Q21 positive; estimates under review,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. B. Riley slashed the target price to $370 from $374. Cowen raised the target price to $405 from $392. JP Morgan cut the target price to $80 from $90.

“Expanded eComm capabilities, improved supply chain, better inventory management, & product initiatives led to enviable ’18-’19 performance & a robust return to pre-COVID-19 performance levels in 2H20, making high-teens-low-20s % comps seem normal. Still, current valuation appears extreme & positive EPS revisions appear minimal, so we stay EW,” Morgan Stanley’s Greenberger added.

“Compelling LT & post-COVID-19 growth opportunity driven by three factors: 1) international expansion, 2) digital growth, & 3) product innovation. LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products, & its athleisure focus is further advantaged in a COVID-impacted world.”

Check out FX Empire’s earnings calendar

What to Expect From Lululemon’s Q1 Earnings Report on Thursday

The Vancouver-based retailer healthy lifestyle-inspired athletic retailer Lululemon is expected to report its fiscal first-quarter earnings of $0.90 per share, which represents year-over-year growth of over 309% from $0.22 per share seen in the same period a year ago.

The apparel retailer would post year-over-year revenue growth of over 70% to $1.12 billion. In the last four quarters, on average, Lululemon has beaten earnings estimates by over 13%.

The company is expected to report earnings after market close on Thursday, June 3. Lululemon shares fell over 7% so far this year.

Analyst Comments

“Revenue & GM upside could yield a 16c 1Q21 EPS beat vs. the Street. While 1Q21 beats & raises haven’t been enough to send most Softline retailers’ shares higher, Lululemon (LULU) may be an exception as investors move up the quality curve. Trim PT to $377 on an updated WACC; raise 1Q21 EPS on better sales,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

“We raise our 1Q21 EPS expectation to 92c from 90c prior on an improved revenue forecast, slightly offset by higher SG&A expense. But we see room for revenue & GM-driven upside, which could push 1Q21 EPS to $1.06. We raise our 1Q21 revenue estimate above the high end of guidance on better-than-expected, more durable 1Q21 eCommerce revenue strength exhibited by LULU’s specialty retail counterparts. However, we still see room for upside, as our revenue forecast assumes a 21% 2Y CAGR vs. 4Q20 +24% y/y & 3Q20 +22% y/y. If we were to assume revenue remains at the 24% 2Y CAGR level delivered in 4Q20, 1Q21 topline could be as high as $1.2B. This would add 4c to our EPS estimate, resulting in 96c EPS.”

Lululemon Stock Price Forecast

Fifteen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $397.33 with a high forecast of $465.00 and a low forecast of $330.00.

The average price target represents a 22.96% increase from the last price of $323.13. Of those 15 analysts, 12 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley slashed the stock price forecast to $377 from $394 with a high of $476 under a bull scenario and $138 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Several other analysts have also updated their stock outlook. Piper Sandler decreased their target price to $478 from $490 and set an “overweight” rating. TheStreet downgraded from a “b” rating to a “c+” rating.

Cowen reduced their price objective to $389 from $409 and set an “outperform” rating. Robert W. Baird reduced their price objective to $395 from $425and set an “outperform” rating.

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Zoom, Advance Auto Parts, Lululemon and Cooper Companies in Focus

Earnings Calendar For The Week Of May 31

Monday (May 31)

There are no major earnings scheduled

Tuesday (June 1)

IN THE SPOTLIGHT: ZOOM

The San Jose, California-based communications technology company Zoom is expected to report its first-quarter earnings of $0.99 per share, which represents year-over-year growth of about 395% from $0.20 per share seen in the same period a year ago.

The company, which provides videotelephony and online chat services through a cloud-based peer-to-peer software platform, would post revenue growth of 175.8% to $905.24 million.

For first-quarter fiscal 2022, Zoom forecasts revenues in the range of $900 million and $905 million. Non-GAAP income from operations is expected in the range of $295 million and $300 million. Moreover, non-GAAP earnings are expected in the 95-97 cents-per-share range.

The cloud video communications provider forecasts revenues in the range of $3.760 billion and $3.780 billion for the full fiscal year.

“Sentiment improving, but still leans negative heading into FQ1. Commentary around 2H churn / Phone still likely more incremental to move vs. 1Q print / 2Q guide. Profitability potential meaningful LT, but balanced in NT by churn concerns, keeping us EW into print,” noted Meta A Marshall, an equity analyst at Morgan Stanley.

Zoom has established its position as the newly emerged leader in video conferencing, now a growth market, largely credible to the company itself given an introduction of a solution that employees actually use. The company has a meaningful competitive moat built on more than just architecture, but a rapid uptick in video usage has attracted significant investment efforts from competitors. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins encouraging. Environment post-COVID and large-scale WFH, and timing to reach, less certain.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 1

Ticker Company EPS Forecast
BNS Scotiabank $1.45
HPE Hewlett Packard $0.42
AMBA Ambarella $0.17
MDLA Medallia, Inc. -$0.07
ZM Zoom Video Communications $0.99

Wednesday (June 2)

IN THE SPOTLIGHT: ADVANCE AUTO PARTS

The leading automotive aftermarket parts retailer is expected to report its first-quarter earnings of $3.05 per share, which represents year-over-year growth of over 235% from $0.91 per share seen in the same period a year ago. The company would post revenues of $3.31 billion.

AAP operates in a defensive (recession-resistant) category and has one of the largest long-term EBIT margin expansion opportunities in our coverage (we estimate 300-400 bps over time). COVID-19 slowed parts of AAP’s transformation but gross and EBIT margin upside from internal initiatives is still expected beginning in 2021,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Significant and improving FCF generation plus share repurchases likely to enhance EPS growth. We think the combination of a defensive category, AAP’s progress generating stable top-line growth, and significant margin upside all make for a positive risk/reward skew.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 2

Ticker Company EPS Forecast
DCI Donaldson $0.58
AAP Advance Auto Parts $3.05
NTAP NetApp $1.12
PVH PVH $0.83
CLDR Cloudera Inc. $0.08
SPLK Splunk -$0.70
GWRE Guidewire Software -$0.24
AI Arlington Asset Investment -$0.25
SMAR Smartsheet Inc. -$0.14
SMTC Semtech $0.52
OMVJF OMV $0.97

Thursday (June 3)

IN THE SPOTLIGHT: LULULEMON ATHLETICA, COOPER COMPANIES

LULULEMON ATHLETICA: The Vancouver-based retailer healthy lifestyle-inspired athletic retailer is expected to report its fiscal first-quarter earnings of $0.90 per share, which represents year-over-year growth of over 309% from $0.22 per share seen in the same period a year ago.

The apparel retailer would post year-over-year revenue growth of over 70% to $1.12 billion.

“Revenue & GM upside could yield a 16c 1Q21 EPS beat vs. the Street. While 1Q21 beats & raises haven’t been enough to send most Softline retailers’ shares higher, LULU may be an exception as investors move up the quality curve. Trim PT to $377 on an updated WACC; raise 1Q21 EPS on better sales,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

COOPER COMPANIES: The global medical device company is expected to report its fiscal first-quarter earnings of $3.09 per share, which represents year-over-year growth of over 104% from $1.51 per share seen in the same period a year ago.

The San Ramon, California-based company would post revenue growth of 31% to $690.73 million.

“Shares of Cooper Companies outperformed the industry in the past six months. The company exited the fiscal first quarter on a strong note, wherein both earnings and revenues beat their respective consensus mark,” noted analysts at ZACKS Research.

“The company witnessed solid performance across its core CVI and CSI units during the quarter under review. Expansion in both gross and operating margins is a positive. Management at Cooper Companies remains optimistic about the Clarity, MyDay and Biofinity suite of products and the portfolio of daily silicone hydrogel lenses, which makes it one of the leaders in the soft contact lens market.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 3

Ticker Company EPS Forecast
SJM J.M. Smucker $1.66
CIEN Ciena $0.48
TTC Toro $1.18
LULU Lululemon Athletica $0.90
WORK Slack Technologies -$0.01
MDB MongoDB Inc -$0.35
SAIC Science Applications International $1.53
DOCU DocuSign Inc. $0.28
AVGO Avago Technologies $6.43
FIVE Five Below $0.65
PD PagerDuty Inc. -$0.09
COO Cooper Companies $3.09
CRWD CrowdStrike Holdings Inc. Cl A $0.06
PLUG Plug Power -$0.08
JOBS 51job $0.43
TOELY Tokyo Electron Ltd PK $1.25
ASEKY Aisin Seiki Co $0.88
AUOTY AU Optronics $0.45

Friday (June 4)

There are no major earnings scheduled

Lululemon Shares Slump Over 4% After It Flags Demand Risks

Lululemon Athletica, a healthy lifestyle-inspired athletic apparel company, reported better-than-expected earnings in the fourth quarter; however, warned that further resurgences in COVID-19 would result in lower consumer demand, and cause disruption in the supply chain, sending its shares down over 4%.

The Vancouver-based retailer said its net revenue rose 24% to $1.73 billion in the fourth quarter, higher than Wall Street’s consensus estimates of $1.66 billion, largely driven by a surge in online sales, which nearly doubled on a comparable basis. Adjusted diluted earnings per share for the fourth quarter of 2020 were $2.58 per share, beating analysts’ expectations of $2.49 per share.

Lululemon expected net revenue to be in the range of $1.100 billion to $1.130 billion for the first quarter of fiscal 2021. Diluted earnings per share are expected to be in the range of $0.81 to $0.85 for the quarter and adjusted earnings per share are expected to be in the range of $0.86 to $0.90.

The apparel retailer forecast net revenue to be in the range of $5.550 billion to $5.650 billion for fiscal 2021. Diluted earnings per share are expected to be in the range of $6.10 to $6.25 for the year and adjusted earnings per share are expected to be in the range of $6.30 to $6.45.

The company also warned that the further resurgences in COVID-19, including from variants could cause additional restrictions, including temporarily closing all or some of our retail locations again, result in lower consumer demand, and cause disruption in our supply chain.

Lululemon Athletica shares, which surged more than 50% in 2020, slumped over 4% to $304.25 on Wednesday.

Analyst Comments

LULU delivered another quarter of revenue & EPS results above Street expectations & in-line with pre-COVID-19 levels. While ’21 EPS guidance came in light vs. the Street, we view it as conservative & anticipate Street ’21 EPS remains largely unchanged. Leave 4Q positive; estimates under review,” noted Kimberly C Greenberger, equity analyst at Morgan Stanley.

“Expanded eComm capabilities, improved supply chain, better inventory management, and product initiatives led to enviable ’18-’19 performance and a robust return to pre-COVID-19 levels in 3Q20, making +mid-high-teens comps seem normal. Still, the current valuation appears extreme, so we stay EW. Compelling LT and post-COVID-19 growth opportunity driven by three factors: international expansion (maybe less evident in ‘20e given COVID-19 outbreak), digital growth, and product innovation. LULU dominates the NA athletic yoga apparel category due to its unique brand positioning and fashionable products, and its athleisure focus is further advantaged in a COVID-19 affected world.”

Lululemon Athletica Stock Price Forecast

Thirteen analysts who offered stock ratings for Lululemon Athletica in the last three months forecast the average price in 12 months of $407.23 with a high forecast of $465.00 and a low forecast of $364.00.

The average price target represents a 33.86% increase from the last price of $304.23. Of those 13 analysts, 11 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $279 with a high of $493 under a bull scenario and $127 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Several other analysts have also updated their stock outlook. UBS raised the stock price forecast to $375 from $364. Bernstein lowered the price target to $351 from $379. BofA Global Research lowered price objective to $410 from $425. MKM Partners cut the price target to $388 from $446. Deutsche Bank slashed the target price to $390 from $396.

Moreover, Citigroup cut the price target to $350 from $385. BTIG lowered the price target to $434 from $453. JPMorgan cut the target price to $418 from $442. B. Riley slashed the target price to $374 from $409. RBC lowered the target price to $380 from $435.

“Although we expect to lift our $155 per share fair value estimate on Lululemon by a mid-single-digit percentage, we continue to view its shares as overvalued at roughly 50 times expected 2021 EPS,” said David Swartz, equity analyst at Morningstar.

Check out FX Empire’s earnings calendar

Lululemon Athletica’s Q4 Earnings to Grow Nearly 9%, Revenue About 19%

Lululemon Athletica, a healthy lifestyle-inspired athletic apparel company, is expected to report its fourth-quarter earnings of $2.48 per share, representing year-over-year growth of about 9% from $2.28 per share seen in the same quarter a year ago.

The Vancouver-based retailer would post year-over-year revenue growth of about 19% year-on-year to around $1.7 billion. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 12%.

Lululemon shares, which surged more than 50% in 2020, slumped over 9% so far this year.

Analyst Comments

“While LULU pre-announced FQ4 in early January, we believe the company finished the quarter on a strong note with the potential for modest upside to the revised range. We are modeling FQ4 revenue growth of 17% and EPS growth of 11%. Based on our tracking, we expect FQ4 will be another quarter of robust DTC growth as we are modeling +45% digital revenue growth yet our web traffic data points to web traffic that was up +63% y/y, implying upside of 20%+ to our digital estimate. Importantly, digital strength appears to have continued into FQ1 as web traffic QTD through March 27 was up +41% y/y vs. our 1Q estimate of +15%, implying our estimate is too conservative,” noted Camilo Lyon, equity analyst at BTIG.

“With respect to stores, we are modeling a sequential improvement in stores with Q4 comps -10% although we expect COVID case spikes, cold snaps, and Canadian/European shutdowns likely created further pressure on store traffic that has likely lingered into Q1. Looking forward, we anticipate a strong recovery in-store performance in 2021 as LULU anniversaries COVID shutdowns in 1H21, vaccines rollout, and pent-up demand drives consumers back to stores. We reiterate our BUY rating and $453 price target.”

Lululemon Stock Price Forecast

Twelve analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $421.08 with a high forecast of $478.00 and a low forecast of $364.00.

The average price target represents a 33.19% increase from the last price of $316.16. Of those 12 analysts, 10 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $386 with a high of $493 under a bull scenario and $127 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

“We see upside to both Street 4Qe EPS & mgmt. guidance, as revenue, GM, & SG&A assumptions appear conservative. The recent pullback may make for an attractive entry point, though we acknowledge valuation remains full at 46x ’21e P/E. Stay Equal-weight for now, & trim price target to $386 on rising rates/WACC.,” noted Joseph Moore, equity analyst at Morgan Stanley.

“Expanded eComm capabilities, improved supply chain, better inventory management, and product initiatives led to enviable ’18-’19 performance and a robust return to pre-COVID-19 levels in 3Q20, making +mid-high-teens comps seem normal. Still, the current valuation appears extreme, so we stay EW. Compelling LT and post-COVID-19 growth opportunity driven by three factors: international expansion (maybe less evident in ‘20e given COVID-19 outbreak), digital growth, and product innovation. LULU dominates the NA athletic yoga apparel category due to its unique brand positioning and fashionable products, and its athleisure focus is further advantaged in a COVID-19 affected world.”

Several other analysts have also updated their stock outlook. Deutsche Bank lowered the stock price forecast to $396 from $400. Piper Sandler cut the target price to $478 from $490. Raymond James boosted their price objective to $500 from $400 and gave the stock a “strong-buy” rating. Wells Fargo boosted their price objective to $330 from $275 and gave the stock an “equal weight” rating.

Check out FX Empire’s earnings calendar