Needham brought Lululemon stock on Monday to hold from buy, saying the athletic clothing maker faces tough year-over-year sales growth comparisons.
“We of [long-term] drivers remain intact (international, e-commerce, and men’s) and 1Q18 should be eulogistic on a strong start to the year and easy comparisons,” analyst Rick Patel commanded in a note to clients.
“However, we think the setup is more difficult for 2Q-4Q18 when LULU laps star execution from last year. Guidance for 2018 reflects the continuation of efficient momentum and the Street is already modeling this. Because of this and its store valuation, we see less potential for upside, and accordingly move to the sidelines,” Patel put about.
Shares of Lululemon have been on a tear over the past year, wave more than 80 percent. The stock is also up more than 22 percent in 2018. Lululemon servings rose slightly Monday.
Patel said the company’s operating limits expansion is likely to moderate. “In ’18, we see opportunity for higher [gross limits] from using less airfreight and improved product margin (fewer markdowns) but we come up with the low-hanging fruit has been picked,” he said.