Lululemon Stock Gains on Updated Profit Forecast

Lululemon Athletica's stock price (NASDAQ:LULU) is moving higher in pre-market trading following the company's revised profit forecast for the fourth quarter of fiscal 2025. The athletic apparel retailer now anticipates its financial results will land at the higher end of previous estimations, boosting investor confidence.

LULU's stock currently trades 2.01% higher, reaching $208. This upward movement reflects the market's optimistic response to Lululemon's announcement that it expects net revenue to fall between $3.5 billion and $3.585 billion, and diluted earnings per share (EPS) to range from $4.66 to $4.76.

These figures approach or slightly exceed the consensus estimates of $3.57 billion for revenue and $4.78 for EPS. While the revenue and EPS guidance were revised upward, the company maintained its previous guidance for gross margin, selling, general, and administrative expenses, as well as the effective tax rate.

Several financial analysts have weighed in on Lululemon's prospects in recent days. Telsey Advisory Group increased its price target to $215 from $200, maintaining a ‘Market Perform' rating, citing the company's strong third-quarter results. Bank of America Securities provided an even more bullish outlook, raising its price target by 14% to $480 from $420, reiterating a ‘Buy' rating based on Lululemon's robust holiday performance across various product categories, regions, and sales channels. Bernstein also maintained an ‘Outperform' rating with a price target of $460, noting the company's improved gross margin expectations.

However, not all analysts share the same level of optimism. Jefferies maintained an ‘Underperform' recommendation with a price target of $200, signaling a more cautious view of the company's near-term performance. TD Cowen also adjusted its price target downward to $321 from $373, while still maintaining a ‘Buy' rating, following a recent earnings guidance cut by Lululemon that impacted its stock performance.

Price Targets

Lululemon's management is focused on strengthening its U.S. business operations and capitalizing on future opportunities. The company's ability to exceed expectations during the crucial holiday period suggests resilience and effective strategic execution. The contrasting opinions from analysts highlight the inherent uncertainties and complexities in assessing Lululemon's future trajectory.

Today's price movement reflects the immediate positive response to the updated profit forecast, but the long-term sentiment will depend on Lululemon's ability to sustain its momentum and navigate the evolving retail landscape.