12:45 PM EDT, 08/26/2024 (MT Newswires) -- Lululemon Athletica's ( LULU ) fiscal Q2 earnings per share may top estimates by analysts with Americas revenue little changed, Morgan Stanley said Sunday in a report.

"We don't think bigger-picture debates will be resolved" in Q2, Morgan Stanley said.

EPS in Q2 at $3 might beat Wall Street's consensus at $2.94, Morgan Stanley said. "The market and consensus seem braced for a FY guidance reduction at some point," but the company "has levers to pull" to meet or beat the estimate, the report said.

"A potentially compelling [H2] rate-of-change-story, credible historical track record and still-compelling overall positioning -- against seemingly overly bearish sentiment, a low FY EPS bar and depressed valuation -- to us means the risk/reward skews to the upside from here," the report said.

Morgan Stanley cut its price target on Lululemon stock to $329 from $404 and maintained its overweight rating.

Lululemon's earnings are scheduled to be announced Thursday.

Shares of the company rose 2.2% in recent trading Monday.

Price: 274.32, Change: +5.77, Percent Change: +2.15