On Friday, KeyBanc has revised its price target for Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU), adjusting it to $515 from the previous $570, while keeping an Overweight rating on the shares.
The athletic apparel company reported strong fourth-quarter results that surpassed expectations, along with its outlook for 2024. Despite the positive performance, the forecast for the full year was below anticipated figures, primarily due to weaker trends in the U.S. market.
The updated guidance has led to adjustments in estimates, prompting the decrease in the price target. Nonetheless, the long-term fundamentals for Lululemon are believed to remain strong.
KeyBanc's stance is that the company is well-positioned to achieve its ambitious "Power of Three x2" strategic plan, which aims for approximately $12.5 billion in revenue and a slight increase in operating margin by 2026.
The analyst from KeyBanc highlighted the company's overall robustness in most regions, with widespread strength continuing to be a characteristic of Lululemon's performance. The exception that prompted a more cautious outlook was the softer trends observed in the U.S. market, which influenced the full-year guidance to fall short of expectations.
Despite the revision of the price target, KeyBanc reaffirms its confidence in Lululemon's management and their ability to execute the strategic plan effectively. The Overweight rating suggests that the firm believes Lululemon's stock has a better potential return than the average return of the stocks that KeyBanc covers.
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