MKM Partners Raises Price target on Lululemon Athletica (LULU) Following 4Q Conference Call

MKM Partners reiterated a Buy rating on Lululemon Athletica Inc. (NASDAQ: LULU), and raised the price target to $77.00 (from $69.00), following the company's 4Q earnings call. MKM came away from the call and conversations with management with a better appreciation of catalysts that will fuel mid-teens sales growth and low-20's earnings growth over the next several years. While traffic has softened since 4Q, MKM look's for continued gains in AUR and potential for a rebound in traffic and/or stronger conversion stemming from a host of product opportunities.

Analyst Roxanne Meyer commented, "LULU has spent the past few quarters defending its ability to realign inventory and expand gross margin from supply chain initiatives. Now, it can move on: 4Q demonstrated that innovation could drive meaningful comp gains (despite increased competition), that inventory realignment is near (and without excessive markdowns required in future quarters), and that gross margin expansion is on track to deliver beginning in 2Q. One step further was the rollout of a five-year plan, which put in perspective the meaningful opportunity for growth still ahead, both top line and margin expansion. We came away more confident in LULU's longer-term earnings model and are raising our price target to $77 from $69."

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 $67.80 yesterday.

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