Lululemon Added to 2014 Janney Best Ideas List
Janney Capital Markets analyst Adrienne Tennant added Lululemon Athletica (NASDAQ: LULU) to "2014 Janney Best Ideas List" and raised the price target from $79 to $90. Tennant noted a "renewed confidence" in the brand, customer base, and transition in the CEO position. The analyst chose Lululemon as the Softlines 2014 Best Idea based on "1) product innovation that is evident with the fall and, more recently, holiday deliveries, 2) brand strength that we believe is strong enough to overcome the luon issue and other recent product complaints, 3) stockouts in the majority of recent holiday product after a mere two weeks in stores and online (some product is already stocked out and was never available online), 4) potential positive catalyst of a CEO announcement in early 2014, and 5) anniversary of the loss of sales and earnings from the luon issue last spring."
Janney commented that Lululemon's "brand equity remains intact" and sees opportunity for multiple expansion and earnings reacceleration. Adrienne Tennant added that the company has the brand equity to see their product at full price.
The analyst expects the company to report 3Q13 EPS of $0.41 compared with management's guidance of $0.39-$0.41, in-line with guidance. Janney raised FY13 estimate from $1.88 to $1.94 versus consensus of $1.96. FY14 and FY15 estimates were also increased from $2.33 to $2.42, and $2.93 to $2.99, respectively.
Lululemon closed at $69.72 on Friday and is currently trading +1.62%.
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