Bernstein SocGen’s Aneesha Sherman is maintaining its Outperform rating on Lululemon Athletica Inc. (NASDAQ: LULU), with a price target of $350.00. While the analyst is supportive of the company’s long-term strategy, they have concerns about short-term headwinds in the U.S. market and doubt near-term comparable sales growth.
Sherman is skeptical that domestic performance will see significant improvement this quarter. Additionally, they are unsure if Lululemon’s expansion in China can fully offset the challenges from its maturing U.S. base. Despite these challenges, Lululemon’s fundamentals remain strong, with gross margins at 59.2% and a 10.1% revenue growth over the past twelve months.
Looking ahead, Sherman anticipates steady gains in China and incremental margin improvements to support earnings growth over time. The $350 price target is based on a 20.5x multiple of projected FY2026 EPS. The analyst recognizes the disparity between Lululemon’s slowing U.S. market and its faster-growing international operations. They are waiting for signs of stabilization in U.S. sales and continued strength in China before reassessing their position.
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Overall, Bernstein SocGen’s outlook on Lululemon remains positive in the long term, with a focus on international expansion and margin improvements driving future growth. Investors should keep an eye on U.S. sales trends and China’s performance to gauge the company’s trajectory in the coming months.
