Lululemon Athletica Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Lululemon Athletica Inc. (NASDAQ:LULU) released its quarterly result to the market. The early response was not positive, with shares down 3.4% to US$259 in the past week. Lululemon Athletica reported US$2.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$3.15 beat expectations, being 8.0% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Lululemon Athletica

Taking into account the latest results, the current consensus from Lululemon Athletica's 35 analysts is for revenues of US$10.5b in 2025. This would reflect a reasonable 4.8% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 4.9% to US$13.95. In the lead-up to this report, the analysts had been modelling revenues of US$10.7b and earnings per share (EPS) of US$14.07 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With no major changes to earnings forecasts, the consensus price target fell 7.6% to US$322, suggesting that the analysts might have previously been hoping for an earnings upgrade. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Lululemon Athletica analyst has a price target of US$445 per share, while the most pessimistic values it at US$194. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Lululemon Athletica's revenue growth is expected to slow, with the forecast 9.7% annualised growth rate until the end of 2025 being well below the historical 23% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.6% annually. So it's pretty clear that, while Lululemon Athletica's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Lululemon Athletica's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Lululemon Athletica analysts - going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Lululemon Athletica's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.