UPDATE: lululemon (LULU) Shares Rise Following Credit Suisse Upgrade; Firm Sees Sustainable Double-Digit Comps

March 7, 2012 7:28 AM EST Send to a Friend
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Price: $48.34 --0%

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(Updated - March 7, 2012 9:36 AM EST)

Shares of lululemon (Nasdaq: LULU) have risen more than 3 percent in Wednesday's morning session following an earlier upgrade from Credit Suisse's Christian Buss. The analyst now rates lululemon shares an Outperform, up from Neutral previously; the stock's price target was boosted by 34 percent from $58 to $78.

Buss cited a recent survey which showed the retailer's capacity to maintain same-store sales growth in the double-digit range, operating margin over 30 percent, and earnings above $5 per share. The analyst compared prices for each product on lululemon's Canadian web site and concluded the retailer will continue to be able to offer about 90 percent of its wares at a full-priced level.

Buss revised estimates for lululemon following the survey:
  • FY12 EPS from $1.60 to $1.69, vs. the Street consensus of $1.25;
  • FY12 same-store sales from 7.6 percent to 15.1 percent;
  • FY12 sales from $1.293 billion to $1.328 billion, vs. the consensus of $991.23 million;
  • FY13 EPS from $2.06 to $2.26, vs. cons. of $1.60;
  • FY13 comps from 6.5 percent to 13.5 percent, and
  • FY13 sales from $1.63 billion to $1.732 billion, vs. cons. of $1.3 billion.
With lululemon shares last trading at $68.23, Credit Suisse's new price target implies potential upside of about 14 percent.

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