Oppenheimer Raises Price Target on Lululemon Athletica (LULU) Following Strong 4Q
Oppenheimer reiterated an Outperform rating on Lululemon Athletica Inc. (NASDAQ: LULU), and raised the price target to $80.00 (from $70.00), following the company's 4Q earnings report. LULU's holiday results were better across the board, with 11% comp 7-point acceleration on 2-year stack, gross margins exceeding high end of guided range and inventory reduction progressing ahead of plan. LULU also provided 2020 goals, with revenues expected to double and earnings to more than double.
Analyst Anna Andreeva commented, "LULU's product/supply chain investments are finally bearing fruit, with better execution driving comp acceleration in 4Q15 (women's bottoms up 19% since pant wall relaunch in September) and gross margin beat (exceeded high end of guidance) despite clearing through inventories; after four years of gross margin decline, LULU's earnings power is accelerating into '16 (first year of potential EBIT margin expansion since '11). While '16 comp guidance for MSD implies acceleration on 2-year stack, impact of new design leadership starts this summer, and brand equity remains solid. All in, LULU's top and bottom lines are set to inflect in '16 and beyond; growth story is shifting from unit growth to sq ft (testing both smaller and larger formats) as LULU smartly manages real estate destiny."
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Shares of Lululemon Athletica Inc. closed at $67.80 yesterday.