Lululemon Athletica now expects 4Q sales and earnings to be at the high end of its previous guidance range as the athletic apparel and accessories retailer benefited from strong demand during the holidays.
Previously, Lululemon (LULU) had projected sales to grow in the mid-to-high teens range on a year-on-year basis. For adjusted earnings per share, the company had forecasted year-over-year growth in the mid-single digits.
Lululemon said that strong demand during the holiday shopping season and strength at its digital and physical stores drove growth during the fourth quarter. Furthermore, the company remains optimistic about growth opportunities in 2021. (See LULU stock analysis on TipRanks)
On Dec. 10, Lululemon reported better-than-expected 3Q results. Net revenue grew 22% to $1.12 billion year-on-year and surpassed analysts’ expectations of $1.01 billion. Adjusted EPS of $1.16 beat Street estimates of $0.87 and improved 20.8% from the $0.96 reported during the same period last year.
Argus Research analyst John Staszak on Dec. 14 raised the stock’s price target to $400 (10.6% upside potential) from $380 and reiterated a Buy rating. Staszak anticipates further recovery in Lululemon’s earnings post the distribution of the COVID-19 vaccine. The analyst cited LULU's strong brand image and growing direct-to-consumer sales, and believes that there is an opportunity for the company to grow outside of North America, mainly in China.
Consensus among analysts is a Moderate Buy based on 11 Buys and 4 Holds. The average price target of $407.80 implies upside potential of 12.8% to current levels. That’s after shares already rallied about 54% over the past year.
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Abercrombie & Fitch updated its 4Q sales and margin outlook, sending the shares of the casual clothing and footwear retailer up 7% on Monday.
Abercrombie (ANF) reported that it now expects 4Q sales to decline by 5%-7%, compared to its earlier expectations of a 5%-10% decline. The updated guidance reflects continued momentum in digital sales which partially offsets the negative impact of store closures and capacity restrictions across the EMEA and North America.
Furthermore, Abercrombie now sees its 4Q gross profit margin expanding by at least 130 basis points versus the same period last year. In a previous forecast, the company expected its gross margin to remain flat or to increase slightly from the year-ago quarter. (See ANF stock analysis on TipRanks)
Abercrombie forecasted operating expenses to drop by at least 2% year-over-year, compared to a previous guidance of a 1%-2% increase. Lower operating expense expectations were due to fewer store openings and rent reductions.
Last month, Morgan Stanley analyst Kimberly Greenberger raised the stock’s price target to $14 (39.2% downside potential) from $10 following the company’s 3Q results. Greenberger noted that Abercrombie’s 3Q results benefited from the casual apparel trend and she believes the momentum will continue to add to the company’s top-line performance over the next two quarters. However, the analyst stuck to a Sell rating on the stock citing concerns over durability and stretched valuation.
Currently, the stock has an analyst consensus of a Hold based on 4 Holds, 2 Buys, and 2 Sells. The average price target of $22.63 implies downside potential of about 1.8% to current levels. Shares have gained by about 33.3% over the past year.
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Acacia Communications provided a better-than-expected preliminary profit outlook for the fourth quarter and full-year 2020. Acacia is scheduled to report its 4Q results in February. The stock increased 1.6% in Monday’s extended trading session.
Acacia (ACIA) projects 4Q adjusted earnings to be in the range of $0.88-$0.97 per share, beating the Street’s estimates of $0.76 per share. The company expects to generate 4Q revenue of between $160 million-$164 million, compared to analysts' expectations of $162.2 million.
As for 2020, Acacia forecasted earnings in the range of $2.86-$2.95 per share, above the consensus estimates of $2.73 per share. Revenue is estimated to generate $579.3 million-$583.3 million in 2020, compared to analysts’ expectations of $581.5 million. (See ACIA stock analysis on TipRanks).
In a separate development, Acacia’s merger deal with Cisco Systems (CSCO) is turning bitter. Acacia announced that it has filed a counterclaim in response to Cisco's complaint.
According to Cisco, Acacia is trying pull out of the deal even after meeting all regulatory conditions for closing the transaction. Meanwhile, Acacia is claiming that it had "validly terminated" the Cisco deal on Jan. 8 as the transaction hadn't been approved by Chinese regulators before the agreed-upon termination date.
Following the termination of the deal, Needham analyst Alex Henderson said, “From our perspective, Cisco is saying we want more time and is willing to waive the Chinese approval. To us, it looks like Cisco is asking for another period when the clock runs down on the fourth quarter, and that's simply not how it works.”
Henderson added, “We think Acacia has the right to break the deal, but will not be paid a break-up fee.” The analyst believes that “if the deal break is confirmed, as a stand-alone company, Acacia is worth $95-$110 per share.” The analyst maintained a Hold rating on the stock.
Overall, consensus among analysts is a Moderate Buy with 2 analysts recommending a Buy and 1 suggesting a Hold. The average price target of $110 implies upside potential of 34% to current levels. Shares have gained 19.8% over the past year.
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Bristol-Myers Squibb announced a $2 billion share buyback program, sending shares of the biopharmaceutical company up 4% on Monday.
Bristol-Myers’ (BMY) additional share buyback plan brings the total stock repurchase authorization to approximately $6.4 billion.
Separately, Bristol-Myers announced the collaboration with healthcare company, Grail, to evaluate early detection technology for cancer MRD (minimal residual disease). (See BMY stock analysis on TipRanks).
On Dec. 15, Goldman Sachs analyst Terence Flynn raised the stock’s price target to $86 (32.4% upside potential) from $82 and maintained a Buy rating. The analyst said that the company’s commercial execution, robust product pipeline, and FDA approvals would help drive significant growth. Flynn added that he expects the company to generate revenue of $13 billion in 2025.
From the rest of the Street, the stock scores a bullish outlook with the analyst consensus of a Strong Buy based on 9 Buys and 3 Holds. The average analyst price target of $75.20 implies upside potential of about 15.8% to current levels. Shares have gained 2.4% over the past year.
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