Why This Lululemon Athletica Analyst Cuts Rating Ahead Of Q3 Print
Portfolio Pulse from Priya Nigam
Raymond James analyst Rick Patel downgraded Lululemon Athletica Inc (NASDAQ:LULU) from Strong Buy to Outperform while raising the price target from $440 to $495 ahead of the company's Q3 earnings call. Despite anticipating a revenue beat, Patel suggests the stock's recent rally already reflects this potential upside. He expects 17% revenue growth but predicts operating margins to be lower year-over-year due to higher investment spending. Lululemon has a history of beating revenue and EPS estimates in previous quarters. Patel models slower growth for the fourth quarter and notes increased competitor promotions.
December 05, 2023 | 5:52 pm
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NEUTRAL IMPACT
Lululemon Athletica's stock was downgraded by Raymond James from Strong Buy to Outperform, despite a raised price target from $440 to $495, due to the stock's recent performance potentially already pricing in the expected positive Q3 results.
The downgrade from Strong Buy to Outperform indicates a more cautious outlook on the stock's short-term upside potential, as the recent price rally may have already accounted for the anticipated positive earnings results. However, the increase in the price target to $495 reflects a belief in the company's continued growth and performance, which could maintain investor interest. The mixed signals from the downgrade and the price target increase suggest a neutral short-term impact on the stock price.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 100