Q: Hi there, regarding your recent answer to fashion retailers, where in your opinion do you see price support for LULU being?
Also, where in your opinion do you see the bottom in a market correction where it becomes too irresistible to start adding for a full position?
Thanks!
Also, where in your opinion do you see the bottom in a market correction where it becomes too irresistible to start adding for a full position?
Thanks!
5i Research Answer:
It's always tough to catch a falling knife and investor frustration with LULU could see it fall further. But it has a strong balance sheet and at some point we think it could do a large share buyback. Also, with its brand and 12X valuation, we would not be surprised to see some activist investors get involved to shake things up at the company. 10X earnings ($135) we think would be very interesting in a correction. We should see support in the $145 to $148 range without a major market correction.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in LULU.