Goldman Sachs Maintains Buy on Lululemon After 3Q Results

Goldman Sachs has published a research report on Lululemon Athletica LULU after the company reported its 3Q results. In the report, Goldman Sachs writes, "4Q EPS of $0.27 vs. FC $0.25/ GS $0.27 (+50% YoY). Vs. our expectations, comp sales +16% were in-line, gross margin was slightly better (+70bgps YoY) and SG&A levered slightly less than we anticipated (-130bps YoY). Inventory was +77% vs. sales +31% as mgmt rebuilt vs. overly lean levels last yr. Mgmt guided 4Q comps + low to mid-teens, consistent with 3Q guidance, and guided EPS $0.40-0.42 (in-line with consensus of $0.41)." Goldman Sachs goes on to write, "Looking ahead to Spring, LULU has opportunity to accelerate sales in 1H12 against the significant inventory out-of-stocks that began in early 2011 – this would drive upside to our estimate and meaningful upside to consensus (consensus implies 2012 comps sales slow to around 10%)." Goldman Sachs maintains its Buy rating and $64 price target on Lululemon, which is currently trading down $5.40 from yesterday's $49.70 closing price.