Lululemon: Analysts Bullish on Strong Q2 Earnings

Lululemon Athletica Inc. (LULU) brushed aside concerns that a sluggish North American retail sector this year would harm its bottom line, as the trendy Vancouver-based athletic apparel maker doubled second-quarter profit. Profit leapt to over $12-million from $5.5-million in the year-earlier quarter, as sales climbed 13%. Diluted earnings were $0.16, or $0.03 above consensus estimates, prompting analysts Paul Lejuez and Tracy Kogan of Credit Suisse to reiterate their "outperform" rating on the stock.

In a note to clients, they wrote:

A good quarter on the top-line, providing evidence that the company is somewhat immune to macroeconomic issues.

They maintained a 12-month $42 price target.

The company said it benefited from an abnormally low tax rate in the quarter which it expects to pick up as plans to open 35 new locations across the U.S. and Canada proceed. However, the retailer's long-term growth is best-in-class the analysts said.

As the company expands its store footprint throughout the U.S., the company should continue to generate significant earnings growth.

Analyst Howard Tubin of RBC Capital Markets shared in the optimism, rating the stock an "outperform" with a price target of $30.