Preview Of lululemon's Q1 Earnings: Margin Recapture Remains In Focus

Investors in Lululemon Athletica inc. LULU shares have been anticipating the company's first-quarter earnings report, expected out before the market opens on June 8, 2016. Heading into the results, lululemon shares have rallied nearly 13 percent since the low set near the end of May around $60.

At least one analyst, Canaccord Genuity's Camilo Lyon, has recommended investors stay on the sidelines heading into the quarterly figures.

In a research report from Monday morning, Lyon maintained a Hold rating and $70 price target on lululemon shares.

While Lyon said he expects the company to report a "solid" quarter, he warned lululemon "expectations are already embedding a comp/EPS beat, and with the stock trading 30x our forward NTM EPS estimates, the risk/reward appears balanced."

"Longer term, we have early reservations around the duration of the athleisure cycle (now 6 years long), from which LULU has not only benefited, but also led. While near-term trends for LULU look positive, we are wary of
trend shifts that could emerge," Lyon wrote in the note.