Shares of Lululemon Athletica inc. (NASDAQ:LULU) soared nearly 7% today after the company released results from its latest quarter. The company posted earnings of 75 cents per share on revenue of $521 million for the fourth quarter. Analysts were expecting earnings per share of 72 cents on revenue of $516.8 million.

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In spite of the earnings beat, however, Sterne Agee analysts aren’t convinced. They note that shares have been quite volatile over the last year or so. They believe the reason shares have risen today is because investors believe the bottom has been hit, but they think the stock still has room to fall.

Projecting Lululemon Athletica’s first quarter

In a report dated March 27, 2014, analysts Sam Poser and Ben Shamsian say they don’t expect Lululemon Athletica inc. (NASDAQ:LULU)’s first quarter results to be very good. They’re projecting brick and mortar same store sales to be down in the low single digits in the current quarter. They believe that could improve slightly throughout the year.

However, they don’t think that the price to earnings multiple of about 28 times is warranted. Instead, they say a multiple of 20 to 23 times fiscal 2014 earnings per share estimates is more warranted because of expected low single digit same store sales. And they only give the company that high of a multiple because they expect Lululemon Athletica inc. (NASDAQ:LULU) to continue seeing store growth.

Remaining Underperform on Lululemon Athletica

The Sterne Agee team said they still rate Lululemon Athletica inc. (NASDAQ:LULU) as Underperform for a couple of reasons. They say guidance of same store sales of up low to mid-single digits “is not a slam dunk.” They say even though the company has shown strength in its seasonal products, they think it is having trouble bringing new customers over to its brand. They note that guidance assumes an acceleration from the company’s current trends.

The other reason they see Lululemon Athletica inc. (NASDAQ:LULU) as Underperform is because of the damage that has been done to the company’s brand and reputation. They agree with others that the product and supply chain problems are going to be resolved. However, they place most of the value in the company’s products in a combination of both a great product and a great experience in stores. They note that the supply problems have damaged that combination, thus sending customers over to competing brands which may have a “better value proposition.”

Sterne Agee analysts have a $43 per share price target on Lululemon Athletica inc. (NASDAQ:LULU).