Lululemon’s shares plunged nearly 7% in pre-market trading on Monday after the Vancouver-based healthy lifestyle-inspired athletic retailer warned its fourth-quarter earnings and revenue will be hit by the Omicron variant of the coronavirus.
The apparel retailer expects the company’s net revenue to be toward the low end of its range of $2.125 billion to $2.165 billion, and diluted earnings per share and adjusted diluted earnings per share to be toward the low end of its ranges of $3.24 to $3.31 and $3.25 to $3.32, respectively.
Not only Lululemon, everyone has been affected by the Omicron virus, and this is hurting the retail sector at large, which is already dealing with a strained supply chain.
Following this, Lululemon shares plunged nearly 7% to $332 in pre-market trading on Monday. The stock rose over 12% in 2021.
“We are closing out a strong 2021 in the coming weeks, and we’re pleased with how lululemon has delivered over the course of the year. We started the holiday season in a strong position but have since experienced several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations. I am proud of how our teams continue to deliver for our guests, and we are excited about what the future holds for lululemon,” noted Calvin McDonald, Chief Executive Officer.
“Lululemon (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.
“LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”
Lululemon Stock Price Forecast
Sixteen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $467.44 with a high forecast of $530.00 and a low forecast of $344.00.
The average price target represents a 31.60% change from the last price of $355.21. From those 16 analysts, 11 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $283 with a high of $524 under a bull scenario and $244 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.
Several other analysts have also updated their stock outlook. Truist Securities initiated coverage with a hold rating and set the target price at $435. MKM Partners raised the target price to $485 from $468. Deutsche Bank cut the target price to $484 from $486. JPMorgan lowered the target price to $518 from $570.
Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator is giving a mixed signal.
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This article was originally posted on FX Empire