Lululemon Athletica (NASDAQ:LULU) is scheduled to release its fiscal second-quarter results after the market closes on August 31. The athletic apparel maker’s remarkable earnings beat history of 11 consecutive quarters raise hopes that it could surpass estimates again in the to-be-reported quarter.
It’s worth mentioning that LULU was able to deliver top-line growth in the last quarter despite an uncertain macroeconomic environment and consumers spending less on luxury items. This can be attributed to the company’s success in introducing trendy items along with successful marketing. Thus, it’s reasonable to expect that the company’s sales have probably increased in Q2 as well.
Overall, the Street expects Lululemon to post earnings of $2.54 in Q2, higher than the prior-year figure of $2.20. Meanwhile, analysts expect the company to report net revenue of $2.17 billion, up 16.7% from the same quarter last year.
Here’s What Analysts Think About LULU
Analyst John Kernan from TD Cowen is bullish on the stock. Last week, he reaffirmed a Buy rating on LULU, with a price target of $531. The analyst believes Q2 was quite challenging for the apparel sector but that Lululemon performed well individually. Kernan sees the potential for LULU’s management to raise their full-year guidance, with “room to express confidence in near- and long-term targets both in North America and International.”
Additionally, KeyBanc analyst Noah Zatzkin maintained a Buy rating on LULU stock and raised the stock’s price target to $425 from $400. The analyst expects Lululemon’s 2023 sales to increase by 17%. In a research note to investors on July 25, Zatkin said that LULU is well-poised to benefit from increasing brand awareness, international expansion, and the introduction of new/innovative products.
Is LULU a Good Stock to Buy?
Overall, Wall Street is cautiously optimistic about LULU stock. Overall, the stock has a Moderate Buy consensus rating based on 15 Buys, one Hold, and three Sells. The average LULU stock price target of $423.11 implies 11.9% upside potential from current levels.
Insights from Options Trading Activity
TipRanks now presents options activity to help investors plan their trades ahead of earnings releases. Options traders are pricing in LULU stock to move by +/-7.51% after reporting earnings. The anticipated earnings move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Last quarter, the stock rose by 11.3% after the company delivered better-than-expected results for the first quarter.
Ending Thoughts
Lululemon’s push for new product introductions and enhanced brand awareness may further drive its expansion. Additionally, the company’s ambition to expand globally has the potential to elevate its top-line revenue.
