UPDATE: Canaccord Genuity Starts Lululemon Athletica Inc. (LULU) at Buy

December 3, 2012 7:23 AM EST Send to a Friend
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Price: $53.02 -0.41%

Rating Summary:
    16 Buy, 17 Hold, 6 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 42 | New: 52
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(Updated - December 3, 2012 8:47 AM EST)

Canaccord Genuity initiates coverage on Lululemon Athletica Inc. (NASDAQ: LULU) with a Buy. PT $91.00.

"We believe LULU is evolving from an athletic brand with its roots in yoga to a lifestyle brand that is marrying form and function," analyst Camilo Lyon comments. "To that end, the company has had issues in keeping pace with demand. Our supply chain checks suggest capacity in 2013 will expand and as a result traffic and conversion should improve, resulting in a reacceleration of comp growth."

The firm said key manufacturers are expanding production lines dedicated to LULU garments in 2013. "In years past, we believe LULU has left demand unmet due to faster than anticipated sell through. While a signal of a strong brand, this has resulted in LULU under-earning its true potential. We estimate increasing production capacity could result in an incremental $0.09-$0.18 in EPS in 2013."

In addition, e-commerce growth is set to ramp. "Now that LULU can ship to 51 new countries, we believe it is on the verge of accelerating its international brand presence. Ultimately, we expect international e-commerce to serve as a leading indicator for new store openings."

With 200 stores today, the firm believes Lululemon can double its U.S. square footage.

For an analyst ratings summary and ratings history on Lululemon Athletica Inc. click here. For more ratings news on Lululemon Athletica Inc. click here.

Shares of Lululemon Athletica Inc. closed at $71.78 yesterday.


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