Lululemon Athletica Inc. (LULU) is celebrating a triumphant third quarter, sending its stock price soaring. The athletic apparel giant exceeded financial expectations, prompting a significant boost to its share repurchase program and eliciting overwhelmingly positive responses from Wall Street analysts.
The company announced a $1 billion increase to its share buyback authorization, bringing the total to approximately $1.8 billion. This follows the repurchase of 1.6 million shares for $408.5 million throughout the third quarter. This aggressive buyback strategy demonstrates Lululemon’s confidence in its future growth and its commitment to returning value to shareholders.
Lululemon’s Q4 guidance further fueled the positive market reaction. The company projects revenue between $3.475 billion and $3.510 billion, surpassing analyst estimates of $3.496 billion. This strong outlook reinforces the company’s robust financial health and its continued dominance in the athleisure market.
The stellar results triggered a wave of upward revisions in price targets from leading analysts:
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Stifel:
Jim Duffy reiterated a Buy rating, increasing the price target to $438 from $370. Duffy highlights Lululemon’s advantageous position within ongoing market trends, particularly noting the potential for underestimated international growth. He projects several years of strong revenue growth, margin expansion, and share repurchases, underpinned by Lululemon’s efficient business model. Duffy also raised his FY24 EPS estimate from $14.00 to $14.17.*
JP Morgan:
Matthew R. Boss maintained an Overweight rating, raising the price target to $425 from $338. Boss emphasizes the significant untapped potential in both the domestic and international markets, forecasting revenue to reach approximately $12 billion by FY26 (compared to $4 billion in FY19). This growth is attributed to factors like international expansion, strong men’s product sales, expansion into new categories (personal care and footwear), and robust e-commerce performance.*
Goldman Sachs:
Brooke Roach maintained a Neutral rating while raising the price target to $365 from $291. Roach is encouraged by Lululemon’s sequential business improvement and a strong holiday season start. She points to progress in product innovation and rebalancing, expecting this to drive stronger U.S. market growth, coupled with continued international momentum and effective cost control.*
KeyBanc Capital Markets:
Ashley Owens reiterated an Overweight rating, increasing the price target to $400 from $350. Owens sees substantial growth opportunities across product categories (innovation in colors, prints, etc.), brand awareness expansion (currently at 36% in the U.S.), and particularly in men’s products, accessories, and international markets. She also highlighted planned expansions into Italy (company-operated) and Denmark, Belgium, Turkey, and the Czech Republic (franchise models) in 2025.*
Truist Securities:
Joseph Civello reiterated a Buy rating, raising the price target to $420 from $360. Civello notes the streamlining of Lululemon’s product development process through its new reporting structure. This has led to faster new product introductions and improved conversion rates, a trend he expects to continue into Q4 and beyond.*
Guggenheim:
Robert Drbul maintained a Buy rating, raising the price target to $415 from $350, and increased the FY24 EPS estimate to $14.15 from $14.05, citing a promising start to the holiday season. However, he also acknowledges macroeconomic uncertainties and the shorter holiday shopping period as potential headwinds.*
Oppenheimer:
Brian Nagel reiterated an Outperform rating. While adopting a more cautious short-term outlook, Nagel remains confident in Lululemon’s long-term prospects.The market reacted strongly to this positive news, with LULU shares surging by 18.5% to $408.5 at the close of trading on Friday. The robust earnings report, coupled with the substantial share buyback, signals a bright future for Lululemon and continues to solidify its position as a leading player in the athletic apparel industry.
