Shares of Lululemon (LULU) have bounced off their June lows–but don’t expect big gains in the future, says DA Davidson’s Andrew Burns, who cut Lululemon to Neutral from Buy:
REUTERS Lululemon Athletica Inc’s founder Chip Wilson We believe the current valuation appropriately reflects the balance of long-term growth potential and near-term execution risk…
We are increasingly concerned that the confluence of 1) increasing competition in the U.S., 2) plateauing store productivity levels, 3) international growth investments and 4) less productive Ivivva stores representing a greater mix of new stores, will all weigh on 2015 results. We believe the brand remains relevant, but expect the time and investments required to realize management's global growth initiatives position 2015 consensus earnings as aggressive…
Sbhares of Lululemon have slipped 2.3% to $40.53, while Nike (NKE) has fallen 0.9% to $78.78, Under Armour (UA) has dropped 0.9% to $69.45 and Gap (GPS), whose Athleta brand competes with Lululemon, is off 0.3% at $46.06.
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