Lululemon Athletica threat/reward favorable into Q1 EPS – Citi

Citi expects Lululemon Athletica (NASDAQ:) to beat first-quarter earnings estimates and lift full-year steering when it experiences after the shut on June 1.

Analysts, who’ve a Purchase ranking and $440 value goal on the inventory, advised traders in a observe Friday that the danger/reward for LULU is favorable.

“We’re above cons in 1Q at $2.07 (vs cons $1.96) primarily based on greater gross sales (pushed by robust China progress) and stronger GM (pushed by higher stream by way of of freight),” the analysts wrote.

“Whereas the retail atmosphere within the US was typically uneven in 1Q, and lots of retailers with important publicity to the decrease revenue client have missed 1Q and guided 2Q/F23 decrease, retailers with extra important publicity to the upper revenue client (Anthro, FP, A&F, DKS) have carried out properly in 1Q and haven’t seen a slowdown 2Q QTD. We imagine LULU falls into the latter bucket.”

As well as, analysts said that they anticipate administration to boost F23 steering by the 1Q beat and information 2Q in-line with consensus.

Analysts famous that with LULU shares down 11% since early Could, pushed by fears of a client slowdown in discretionary and choppiness within the athletic market, they imagine threat/reward is favorable into 1Q EPS.