Lululemon Athletica: BTIG reiterates Buy, raises PT to $303.

Lululemon Athletica: BTIG reiterates Buy, raises PT to $303.

Lululemon Athletica Inc. (NASDAQ: LULU) saw its stock price slide in September following the company's management reducing its full-year outlook Why Lululemon Stock Fell Sharply in September^[1]. The athleisure company cited weaker U.S. demand and a significant impact on margins from tariffs as reasons for the downgrade. Despite the sell-off, the stock remains undervalued at a price-to-earnings multiple of 12, according to BTIG, which recently reiterated its "Buy" recommendation and raised its price target to $303 .

The company's fiscal second-quarter revenue grew by about 7% year-over-year to roughly $2.5 billion, with diluted earnings per share at $3.10, down from $3.15 in the year-ago quarter. However, the most concerning news came from the company's guidance. Management reduced its full-year targets to revenue of $10.85 billion to $11 billion and earnings per share of $12.77 to $12.97, signaling slower progress in the core U.S. market Why Lululemon Stock Fell Sharply in September^[1].

BTIG analysts highlighted Lululemon's strong international performance, particularly in China, where revenue surged 22% year-over-year. The company opened five new stores in China during the quarter and increased brand awareness through various community events Lululemon's international expansion to concentrate on China^[2]. This international momentum is crucial for Lululemon, as its U.S. market continues to face challenges, including slowing growth and tariff impacts.

Despite the challenges, Lululemon's solid balance sheet, with $1.2 billion in cash and cash equivalents, provides a safety net. The company is also maintaining a disciplined approach to costs while investing in high-potential areas, such as international expansion, particularly in China Lululemon's international expansion to concentrate on China^[2].

As Lululemon prepares for the upcoming China International Import Expo in Shanghai, the company is expected to showcase its product innovation and brand culture. This event is seen as an opportunity to deepen its connection with Chinese consumers and partners, further solidifying its presence in the region Lululemon's international expansion to concentrate on China^[2].

Investors should approach Lululemon with caution due to the uncertainty surrounding its U.S. market and the impact of tariffs. However, the company's strong international performance and solid balance sheet make it an attractive investment for those willing to take on the risks.