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Lululemon Athletica Inc. (LULU), based in Vancouver, Canada, is a lifestyle-inspired athletic apparel company specializing in yoga, running, training, and other active pursuits. With a market cap of $38.9 billion, Lululemon is renowned for the comfort of its clothing and its ability to create transformative products and experiences.
Companies worth $10 billion or more are generally described as "large-cap stocks," Lululemon fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size and influence in the activewear industry.
However, it's not all rainbows and sunshine, LULU stock has tanked 34.2% from its 52-week high of $480.94 touched on Mar. 21, 2024. Furthermore, the stock has plunged 18.7% over the past three months, underperforming the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 15.8% decline during the same time frame.
Over the longer term, LULU’s performance looks even grimmer. LULU stock has plummeted nearly 32% over the past 52 weeks, significantly underperforming XLY’s 8.9% gains during the same time frame.
To confirm the downturn, LULU has traded consistently below its 20-day moving average since mid-February and its 200-day moving average has been on a downtrend for the past several months.
However, Lululemon’s stock prices soared 15.9% in the trading session after the release of its Q3 results on Dec. 5. Although the company’s Americas sales increased by a modest 2%, its international net revenues increased by a staggering 33%. This led to a robust 8.7% year-over-year growth in overall net revenues to $2.4 billion, surpassing the consensus estimates by a notable 1.8%. Meanwhile, the company showcased impressive expense discipline. After adjusting for impairment expenses incurred in the year-ago quarter, Lululemon’s income from operations surged 18.9% year-over-year to $490.7 million.
Furthermore, on Jan. 13, Lululemon raised its Q4 net revenues guidance to $3.56 billion - $3.58 billion, up from the previously announced range of $3.48 billion to $3.51 billion and its EPS guidance to $5.81 - $5.85, up from $5.56 to $5.64 range.
Meanwhile, LULU has notably underperformed its peer Adidas AG’s (ADDYY) 14.1% gains over the past 52-week period.
Among the 30 analysts covering the LULU stock, the consensus rating is a “Moderate Buy.” Its mean price target of $409.97 suggests a 29.5% upside potential from current price levels.
