Lululemon Athletica Has ‘Very Strong and Healthy Demand’ – Cowen

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A Cowen analyst raised the price target on Lululemon Athletica (NASDAQ:LULU) to $512 from $505 per share in a note on Tuesday, maintaining an Outperform rating.

In the note, the analyst explained the FX impact since guidance shaves 100bps off of the top-line, but they think constant currency guidance is conservative.

“When we model into FY23 we see conservative Consensus estimates on top-line, gross margin and EPS. At 27x FY23E EPS, a full-std deviation below its five-year avg valuation, we view shares as undervalued given future growth potential,” wrote the analyst.

He continued that their recent meetings with management reinforced their view on the stock.

“Management sees very strong and healthy demand for the business in Q2, in line with Q1 demand. Intra-quarter datapoints that we track remain healthy for LULU. Google Search trends were up +54% on a four-week average basis in July, and accelerated to+97% in August. Digital traffic was equally solid, with Similarweb unique visitor traffic data indicating up +13% in July on a three-month y/y basis accelerated to +82% above the 2019 base, and grew +10% in June,” the analyst added.