Targeting $70 For Lululemon
By Markos Kaminis (Wall St. Greek): lululemon athletica inc. (LULU) was in the red by nearly 9% Thursday, because the company produced a softer operating outlook than analysts foresaw and investors had hoped for. After analyzing the situation, it appears there was some misunderstanding between the company and the analytical community. Either that, or corporate management is simply putting a positive spin on its results.In any event, I believe a conservative valuation, applying a forward P/E and PEG ratio of 27X and 1.3X my conservative FY 14 EPS estimate of $2.00, offers prospective investors an opportunity for a 9% return over the coming year to my target of $70. As an analyst, I would attribute a hold rating to a stock offering a return so near the historical annual return of the S&P 500 Index. That said, the conservative nature of my assumptions should offer a margin of safety and opportunity for upside.LULU's firstComplete Story »
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