Deutsche Bank Starts Lululemon Athletica Inc. (LULU) at Hold

Deutsche Bank initiates coverage on Lululemon Athletica Inc. (NASDAQ: LULU) with a Hold rating and $65 price target, saying they are on the sidelines during the management transition.

Analyst Dave Weiner comments, "Despite our view that over time, LULU may develop in to a leading global, diversified lifestyle brand, we initiate at Hold given concerns about key mgmt. transitions and still-vulnerable valuation. While the brand has many key levers, including a meaningful comp opportunity on category extensions and a push in to men's product, we believe these are taking a back seat with investors right now. Primarily, we need visibility around forthcoming CEO and 'chief merchant' hires, both important to reestablishing investor confidence."

The firm's $65 price target is based on LT EPS growth of 20%-25% and a 130% PE/G, in-line w/3Y avg. They see upside risk if 2Q comps are above 7%, with downside as P/E is still lofty (~28x NTM).

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 $61.33 yesterday.

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