Deutsche Bank Comments on Weakness in Lululemon (LULU) Following Q2 Results
Deutsche Bank maintained a Hold rating on Lululemon Athletica Inc. (NASDAQ: LULU) with a price target of $65. Shares declined following the release of Q2 results. Analyst Dave Weiner said a "balanced report" was not what the market wanted.
Weiner explained, "LULU’s after-market move lower post 2Q results is reflective of the high bar the company now faces. With shares up 46% year-to-date into the print (S&P 500 +6.2%) and trading near all-time highs, we believe nearly every line item had to be perfect to satisfy investors. While EPS was in-line and gross margin exceeded expectations, comps fell short. Moreover, ongoing SG&A deleverage gives us cause for concern as it may offset gross margin expansion and derail operating margin recovery. We acknowledge the strength of the lulu brand and the company’s product initiatives, but still-steep valuation keeps us at HOLD. "
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Shares of Lululemon Athletica Inc. closed at $76.66 yesterday.