MKM Partners Reiterates Buy on lululemon athletica (LULU) Following 2Q
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MKM Partners reiterated a Buy rating and $90.00 price target on Lululemon Athletica Inc. (NASDAQ: LULU) following the company's 2Q earnings report. LULU's 5% comp included a 4% store comp and a 7% gain in DTC, below expectation's of 19%, with the differential largely due to the warehouse sale LY.
Analyst Roxanne Meyer commented, "The bears sent LULU’s stock down 8% after-hours on a lower than anticipated headline comp of 5%; we see this as an over-reaction given upside to the store comp and DTC growth that was hampered by the warehouse sale LY. In our view, LULU delivered on every metric in 2Q, even strongly surpassing our expectations as it related to the level of gross margin and inventory improvement it delivered. We look for earnings growth to roughly double in 2H from the 12% growth in 2Q given several product catalysts and initiatives as well as continued tailwinds from gross margin improvement. We believe 2Q's gross margin gain validated the opportunity for gains and sets the stage for the path to longer-term improvement. Reiterate Buy; we’d recommend investors take advantage of stock weakness today."
Shares of Lululemon Athletica Inc. closed at $76.66 yesterday.
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