Lululemon (LULU) Stock Up, MKM Raises Price Target
NEW YORK (TheStreet) -- Shares of Lululemon Athletica (LULU) - Get Report are up by 0.59% to $77.17 in early-morning trading on Monday, as MKM Partners raised its price target on the company to $82 from $77. The firm has a "buy" rating on Lululemon stock.
The firm's "bullish view" of the Vancouver-based athletic apparel retailer is based on "continued comp momentum in men's and women's pants, an inflection in women's tops and benefits from the web relaunch, with gross margin gains supported by supply chain initiatives."
Bearish sentiment surrounds Lululemon's high prices and value proposition in an "increasingly competitive market," but MKM conducted four proprietary surveys and concluded that the company's premium pricing is not a risk.
"We view LULU's price/value perception as strong and showing momentum over the past few quarters, as both price and innovation have risen in tandem," MKM wrote in an investor note.
The firm also noted that their checks in Lululemon's second quarter fiscal earnings indicate that the company's sales of women's clothing is growing and that their inventory "remains well positioned."
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate LULULEMON ATHLETICA INC as a Buy with a ratings score of B-. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
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