MKM Partners Raises price Target on Lululemon Athletica (LULU) Following Priceing Study and 2Q Checks

MKM Partners reiterated a Buy rating on Lululemon Athletica Inc. (NASDAQ: LULU), and raised the price target to $82.00 (from $77.00), following a recent proprietary pricing study of lululemon women’s apparel vs. peers. Checks in 2Q thus far continue to show evidence that momentum continues in women’s bottoms and is building in tops, while inventory remains well positioned. The study found that lululemon prices are on average 24% above peers, though this premium is likely understated as several competitors promote regularly.

Analyst Roxanne Meyer commented, "We view lululemon as one of the most relevant brands in athletic apparel. Our bullish view 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. One point of the bear thesis is centered on LULU’s premium pricing and value proposition in an increasingly competitive environment. We conducted a proprietary pricing study of lululemon women’s apparel vs. peers, which reinforces LULU’s premium price positioning. However, we don’t view lululemon’s premium pricing as a risk, based on an analysis of price/value perception data from our four proprietary LULU surveys done in conjunction with the MKM Intelligence Community. 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."

For an analyst ratings summary and ratings history on Lululemon Athletica Inc. click here. For more ratings news on Lululemon Athletica Inc. click here.

Shares of Lululemon Athletica Inc. closed at $76.72 yesterday.

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