Wedbush analysts provided a review on Lululemon Athletica Inc. (NASDAQ:LULU), expecting the company to update Q4 sales and EPS guidance next week (ahead of the ICR conference), and believe this to be a positive catalyst for the stock.

The company almost always raises Q4 guidance at ICR, with last year being a one-off exception due to the omicron variant surge in Dec/Jan. Store productivity trends also suggest an upside to Q4 guidance, and the analysts’ checks of Lululemon stores during the holiday season uncovered crowded stores, long lines, and minimal discounting.

While COVID disrupted store-traffic trends for all retailers, the company faced a somewhat unique headwind given the fact that their stores are small, so "metering" of store traffic coupled with consumers being wary of entering a highly-crowded store caused a slow recovery of store productivity.

All in, the analysts raised their Q4 sales forecast by approximately 250bps, which takes their Q4/2022/2023 EPS forecasts to $4.36/$10.02/$12.20 (from $4.24/$9.90/$12.06 prior).