Joe Terranova Slams Jefferies Lululemon Downgrade: 'I Completely Disagree With The Report'

Zinger Key Points
  • Virtus Investment Partners' Joe Terranova completely disagrees with the Jefferies analyst.
  • "Lululemon is an idiosyncratic growth story. It's being catalyzed by innovation," Terranova says.

Lululemon Athletica Inc LULU was featured as the call of the day Monday on CNBC's "Fast Money Halftime Report."

What Happened: Jefferies analyst Randal Konik downgraded Lululemon from Hold to Underperform and lowered the price target to $200 from $375, citing pull-forward concerns from the pandemic. 

Konik said growth demand for Lululemon is already as good as it gets. With Nike Inc NKE shares down more than 35% year-to-date, the Jefferies analyst prefers the swoosh over Lululemon stock.

Why It Matters: Virtus Investment Partners' Joe Terranova disagreed with just about everything in the analyst note. He highlighted one point that really set him off.

"I read the whole report. 40% of people gained weight? That's a reason to take the price down to $200? I don't think so. I mean I completely disagree with the report," Terranova said.

He told CNBC that he owns Lululemon stock as a way to get exposure to growth in the consumer discretionary space. At the beginning of June, the company reported 32% revenue growth year-over-year, according to data from Benzinga Pro.

"Lululemon is an idiosyncratic growth story. It's being catalyzed by innovation. This is the actual one name ... that's defying the deceleration we're seeing in terms of comps," Terranova said. 

Lululemon said comparable sales increased 28% year-over-year in the first-quarter of fiscal 2022. If you want exposure to growth in the consumer discretionary space, Lululemon is the best option, Terranova added.

"I'm targeting LULU and I disagree that Nike is the one, on a valuation basis, to own over LULU because LULU has come down enough that it trades at a slight premium to Nike," he said.

See Also: Barron's Latest Picks And Pans: Alphabet, Nike, Microsoft, Peloton And The Top-Performing CEOs Of 2022

LULU Price Action: Lululemon has a 52-week high of $485.82 and a 52-week low of $251.51.

The stock was down 3.86% at $282.07 Monday afternoon. 

Photo: m01229 from Flickr.

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Posted In: Analyst ColorLong IdeasDowngradesAnalyst RatingsMediaTrading IdeasCNBCJoe TerranovaRandal Konik