Lululemon athletica inc. (LULU) is about to show us what it's been up to. The athletic apparel company reports third-quarter earnings Thursday after the closing bell, and Wall Street's sharpening its pencils ahead of the announcement.
Analysts are expecting the Vancouver-based yoga pants empire to post earnings of $2.21 per share, which would mark a noticeable step down from the $2.87 per share it earned in the same quarter last year. On the revenue side, the consensus estimate sits at $2.48 billion, compared to $2.4 billion in the year-ago period.
It's worth noting that Lululemon stumbled slightly in its last earnings report. Back on September 4, the company posted second-quarter revenue of $2.53 billion, just shy of the $2.54 billion Wall Street was hoping for. Not a disaster, but not exactly confidence-inspiring either.
Shares of Lululemon climbed 2.9% on Wednesday to close at $187.62, perhaps reflecting some optimism heading into the earnings release.
So what are the smart money folks thinking? Let's look at how some of Wall Street's most accurate analysts have been positioning themselves recently.
Guggenheim analyst Simeon Siegel, who boasts a 69% accuracy rate, initiated coverage on December 10 with a Neutral rating. Playing it safe right before earnings makes sense when you've got a track record to protect.
Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating on December 8 with a $200 price target. That analyst has a 63% accuracy rate and seems to be in wait-and-see mode.
BTIG analyst Janine Stichter is decidedly more optimistic, maintaining a Buy rating with a $303 price target on November 25. With a 66% accuracy rate, Stichter clearly sees upside potential that others might be missing.
UBS analyst Jay Sole maintained a Neutral rating on November 17 but trimmed the price target slightly from $185 to $183. That 69% accuracy rate suggests this isn't just idle tinkering.
Perhaps most notable is Baird analyst Mark Altschwager, who downgraded Lululemon from Outperform to Neutral back on September 23, slashing the price target from $225 to $195. With a 66% accuracy rate, that downgrade following the Q2 miss looks prescient in hindsight.
The picture emerging here is one of caution mixed with selective optimism. Most analysts are sitting in neutral territory, but there's still a bull case to be made if you believe in the brand's staying power. Thursday's earnings report should clarify which camp has it right.
