Mizuho Securities Upgrades Lululemon Athletica Inc. (LULU) to Buy; Sees Upside Continuing
Mizuho Securities upgraded Lululemon Athletica Inc. (NASDAQ: LULU) from Neutral to Buy with a price target of $78.00, noting comp upside, margin inflection and store growth.
Analyst Betty Chen commented, "We are upgrading LULU to Buy and raising our estimates and PT to $78 following strong topline growth and margin inflection, which we believe could continue to drive EPS in FY17. Our positive view stems from: 1) +MSD comps on product newness & AUR increases, 2) gross margin recovery from supply chain initiatives following ~5 pts of decline since FY12, 3) moderated SG&A spend in FY17, and 4) valuation below historical multiples. With a rare combination of comp gains, store growth, and margin expansion, we expect the stock to trade at a premium valuation and outperform the softlines group."
Analyst Betty Chen commented, "We are upgrading LULU to Buy and raising our estimates and PT to $78 following strong topline growth and margin inflection, which we believe could continue to drive EPS in FY17. Our positive view stems from: 1) +MSD comps on product newness & AUR increases, 2) gross margin recovery from supply chain initiatives following ~5 pts of decline since FY12, 3) moderated SG&A spend in FY17, and 4) valuation below historical multiples. With a rare combination of comp gains, store growth, and margin expansion, we expect the stock to trade at a premium valuation and outperform the softlines group."
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Shares of Lululemon Athletica Inc. closed at $59.84 yesterday.