UBS Cuts Price Target on lululemon athletica (LULU) Following 2Q15

UBS reiterated a Neutral rating on Lululemon Athletica Inc. (NASDAQ: LULU), and cut the price target to $59.00 (from $67.00), following the company's 2Q15 earnings report. Analyst Michael Binetti said that coast port delays, the big 2Q GM miss & 3Q guidance for some ongoing pressures leaves a little less confidence in the NT EPS upside story.

Binetti commented, "Despite the slight 2Q EPS beat, our key 2H concerns are: 1) the 2Q GM miss driven by 110 bps of unexpected product margin declines from costs associated with the port disruption (will partly continue in 3Q) and write-downs on excess fabric (not expected to continue), 2) 3Q EPS guidance of $0.35-0.37 (below Street's $0.43) on +HSD comps (implies a deceleration on a 1-yr basis, though LULU seemed to imply upside if current trends con't) and lower-than-expected GM (Guide: 47% vs Street: 49.5%), and 3) 2Qend inventories +59% (vs sales +16%). While LULU has tried hard to guide the market through a complicated inventory/GM story caused by 1Q W. Coast port delays, the big 2Q GM miss & 3Q guidance for some ongoing pressures (plus 1H SG&A leverage reversing to deleverage in 2H) leaves us a little less confident in the NT EPS upside story."

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 $53.54 yesterday.

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