Oppenheimer Remains Bullish on Lululemon Athletica (LULU) Following Solid 1Q Report
Oppenheimer maintained an Outperform rating and $80.00 price target on Lululemon Athletica Inc. (NASDAQ: LULU) following the company's 1Q earnings report. LULU reported EPS of $0.33, ahead of the Street's estimate of $0.31. Gross margins beat guidance by 130 bps, with upside coming from product margins, less occupancy deleverage and forex.
Analyst Anna Andreeva commented, "LULU is our favorite way to play athletic with company-specific initiatives (inflection in women's tops, seeing ROI on supply-chain investments ahead of plan) driving DD sales growth with earnings finally accelerating (10-15% EPS growth embedded in '16 guidance), after four years of flattish results. +8% comps exceeded MSD guide, with weaker traffic in April offset by improved conversion; we think QTD comps running ahead of MSD guidance. Plus, inventory reduction on plan (inventories/sq ft down 3% ending 1Q16, managed below sales growth in 2H16); big gross margin beat makes expectations for up in '16 realistic. Higher SG&A the only negative as company pulls forward some spend in 2H16; some investments necessary (CRM, digital, new ERP) and better now, given improving sales/margins."
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Shares of Lululemon Athletica Inc. closed at $71.48 yesterday.