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