Goldman Starts lululemon athletica (LULU) at Neutral; Sees Better Back-Half of FY13
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Price: $119.55 -0.01%
Rating Summary:
13 Buy, 34 Hold, 4 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
13 Buy, 34 Hold, 4 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Goldman Sachs initiates lululemon athletica, inc. (Nasdaq: LULU) at Neutral with a price target of $72.
Goldman said it sees "meaningful opportunity" for growth in the women's segment of athletic apparel and views lululemon as best-positioned to take advantage, with direct portion of the Company's business is compelling give that it operates in a superior channel relative to peers. Goldman noted that, while other apparel companies have carved a niche in the men's side of operations, lululemon was able to successfully balance the "soft" and "hard" of the women's side.
Only 60 percent of lululemon's $1.4 billion in revs were generated from 60 percent penetration of its long-term store target, leaving plenty of room for growth, Goldman stated. The firm cited concerns in slowing comps during Q4 on lululemon's run-rate when the company enters its next phase of maturity. The firm notes, "We see sustainable 20%-plus underlying top-line growth over a multi-year horizon and believe comps may in fact continue double-digit trends."
Goldman sees lululemon's recent actions around its Luon pants supply situation as a "transitory issue" to protect brand equity. The firm is concerned about lack of visibility into both the cause and possible solution, making it challenging to gauge timing of a resolution.
"We anticipate continued market share gains in a growing women’s athletic segment, but risk to the multiple hinges on potentially slowing comps," Goldman noted. "While LULU cited QTD comps were running a solid +11%, if comps were to step down going forward to a high-single-digit pace, the multiple may see exaggerated compression until stability around that run-rate can be established." Goldman sees a choppy first-half of 2013, with reacceleration of comps to the 10 percent on the back half. EPS expectations are $1.96 for FY13 and $2.72 for FY14.
Into the open, lululemon is flat.
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 $62.78 yesterday.
Goldman said it sees "meaningful opportunity" for growth in the women's segment of athletic apparel and views lululemon as best-positioned to take advantage, with direct portion of the Company's business is compelling give that it operates in a superior channel relative to peers. Goldman noted that, while other apparel companies have carved a niche in the men's side of operations, lululemon was able to successfully balance the "soft" and "hard" of the women's side.
Only 60 percent of lululemon's $1.4 billion in revs were generated from 60 percent penetration of its long-term store target, leaving plenty of room for growth, Goldman stated. The firm cited concerns in slowing comps during Q4 on lululemon's run-rate when the company enters its next phase of maturity. The firm notes, "We see sustainable 20%-plus underlying top-line growth over a multi-year horizon and believe comps may in fact continue double-digit trends."
Goldman sees lululemon's recent actions around its Luon pants supply situation as a "transitory issue" to protect brand equity. The firm is concerned about lack of visibility into both the cause and possible solution, making it challenging to gauge timing of a resolution.
"We anticipate continued market share gains in a growing women’s athletic segment, but risk to the multiple hinges on potentially slowing comps," Goldman noted. "While LULU cited QTD comps were running a solid +11%, if comps were to step down going forward to a high-single-digit pace, the multiple may see exaggerated compression until stability around that run-rate can be established." Goldman sees a choppy first-half of 2013, with reacceleration of comps to the 10 percent on the back half. EPS expectations are $1.96 for FY13 and $2.72 for FY14.
Into the open, lululemon is flat.
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 $62.78 yesterday.
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