UBS Remains Sidelined on lululemon athletica (LULU) Following In-Line 2Q
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UBS reiterated a Neutral rating and $72.00 price target on Lululemon Athletica Inc. (NASDAQ: LULU) following the company's 2Q earnings report. LULU reported EPS of $0.38, in-line with the Street's $0.38.
Analyst Michael Binetti commented, "With LULU up nearly 45% YTD (vs XRT +2%), we expect shares to be down on 2Q SSS decelerating to 5% (from 8% in 1Q), which was slightly below our +5.5% expectations but well-below buy-side expectations. This deceleration comes ahead of more difficult SSS compares (3Q15 +9%; 4Q15 +11%) as LULU anniversaries LY's pant wall re-launch (its biggest category at ~37% of sales). While LULU is confident in its product pipeline, traffic headwinds have continued into early 3Q from 1H and if women's bottoms slow (from +DD to +M-HSD levels), this will put incremental pressure on women's tops (~33% of sales) to perform (lapping 3Q15's +27%) and overall SSS upside could be harder to achieve. Maintain our Neutral Rating and $72 PT."
Shares of Lululemon Athletica Inc. closed at $76.66 yesterday.
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