Mizuho Securities Cuts Price Target on lululemon athletica (LULU) to $58 following 2Q16
Mizuho Securities maintained a Neutral rating on Lululemon Athletica Inc. (NASDAQ: LULU), and cut the price target to $58.00 (from $63.00), following the company's 2Q16 earnings report and soft 3Q guidance. 2Q EPS of $0.34 was above consensus estimate of $0.33. Management's outlook for 3Q EPS is $0.35-0.37.
Analyst Betty Chen commented, "We are lowering our PT to $58 from $63 on soft 3Q guidance and ongoing concerns with the company’s longer-term margin structure. While we were encouraged by the topline acceleration, positive momentum with the more mature Canadian store base, and Int’l growth, we believe excess inventory may carry markdown risks for the balance of FY15 and lead us to maintain below consensus FY16 EPS. Moreover, ongoing investments in supply chain, Int'l rollout, and the shift towards lower margin assortments may hamper a near-term return of EBIT margin to the low- to mid-20s."
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Shares of Lululemon Athletica Inc. closed at $64.05 yesterday.