Buy Lululemon (LULU) on Weakness - Cowen
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Cowen analyst Oliver Chen said they would be buyers of Lululemon Athletica Inc. (NASDAQ: LULU) on the recent weakness. The firm maintained an Outperform rating and price target of $80
Chen notes shares are down 28% from its YTD peak given comp and margin fears on greater than expected discounting.
Cowen's view is that LULU's markdowns are not greater than last year; however, the online channel this year through the “we made too much” feature could be more strategically used given improved omnichannel integration. Furthermore, utilization of the online channel for clearance vs. physical stores should help drive healthy full price selling and traffic in bricks and mortar stores.
"Based on our store checks, we believe physical store clearance levels are at healthy and in-controlled levels vs. last year," the analyst said.
Shares of Lululemon Athletica Inc. closed at $58.58 yesterday.
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