By Senad Karaahmetovic
Morgan Stanley analyst Kimberly Greenberger upgraded Lululemon Athletica (NASDAQ:LULU) to Overweight from Equal Weight with a $303.00 per share price target, down from $339.00.
The analyst says LULU shares are trading at a discount amid fears of recession and downbeat consumer sentiment.
“Current levels offer an attractive entry point, so we move off the sidelines & recommend long-term oriented investors take another look at this quality asset on sale,” Greenberger told clients in a note.
Risks are priced in, Greenberger added, and the risk is now to the upside as Lululemon’s business could be more resilient through industry/macro headwinds than the market currently discounts.
“LULU could weather industry/macro headwinds more effectively than Softlines peers & what the market is currently discounting.”
On the other hand, UBS analyst Jay Sole sees a balanced upside/downside skew heading into the print for LULU.
“We forecast LULU delivering 1Q22 EPS and FY22 guidance in-line with sell-side consensus EPS estimates. Because of this, we doubt the report causes sell-side EPS estimates to change much. We also believe the market expects this type of report, so we doubt the stock's P/E moves much over the event,” Sole told clients in a note.
The UBS analyst expects a “low volatility” event.
Lululemon stock is up almost 8% today.