Lululemon Athletica Inc. (NASDAQ: LULU) is trading higher this morning after Canaccord Genuity initiated coverage with a Buy rating with a price target of $91 per share. Today’s gain comes from a blended average of 35-times the firm’s 2013 price-to-earnings ratio as well as 25 times it’s enterprise value over EBITDA.
Canaccord’s Camilo Lyon said, “We believe LULU is evolving from an athletic brand with its roots in yoga to a lifestyle brand that is marrying form and function. To that end, the company has had issues in keeping pace with demand. Our supply chain checks suggest capacity in 2013 will expand and as a result traffic and conversion should improve, resulting in a reacceleration of comparable growth.”
The report suggests that key manufacturers are expanding production lines dedicated to LULU garments in 2013. After years of under-production, the call today suggests that higher production capacity could result in an incremental $0.09 to $0.18 in earnings per share out in 2013. Growth in ecommerce is also set to ramp up and Lululemon can now ship to 51 new countries. This should boost its international brand presence and should serve as a leading indicator for new store openings.
Lyon sees more stores and said, “With just 200 total stores today, we believe LULU can double its US sq. ft., while growth abroad is in its infancy.”
As far as the $91 price target, this compares to a share price of $72.88 today and a 52-week range of $42.75 to $81.09. Thomson Reuters has a consensus price target of $81.29 and the highest price target is listed as $100 for this high growth yoga and sporting goods company.
It should be noted that the 1.5% gain today gives a market cap of roughly $10.5 billion.
JON C. OGG
The #1 Thing to Do Before You Claim Social Security (Sponsor)
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
