Lululemon is back!
Lululemon Athletica is back, alive and kicking. They had mostly been in the dog house last year and early this year with a slow recovery from the recession but after surpassing analyst expectations in last Thursday’s earnings report, the share price jumped 16%.
Now let’s review the analyst side of the story. Some analysts are ahead of the game and some are way behind. As an example, Taposh Bari who is an analyst at Jefferies and Co. is way way behind.
On Aug 30th, his comment on Lululemon was:
“We see [Lululemon] as one of the most compelling concepts in retail but also believe there is a disproportionate amount of risk to earnings and sentiment at this company.” and he cut the outlook for Lululemon to underperform. Soon after that, Lululemon reported 2nd quarter same stores sale growth of 50% but did Mr. Bari go back and change his mind about Lululemon? No, of course not. He maintained his outlook until last Friday Dec 10th, where he upgraded his opinion to “Hold”, from “Undperform” and also raised his target price from $40 to $65. Considering the stock price opened at $65.20, is he not telling people to sell since anything over $65 is really a bonus if he is correct in his analysis. Furthermore, since he’s told everyone that would follow his opinion that the company will underperform, who actually has shares to now “hold” on to?? He missed the move entirely, and raised his target price more than 50% from what it was.
How can we follow this analyst who has been so wrong? I’m not saying that people cannot be wrong once in a while but when his guidance is so off the mark, why is he still providing coverage that has already been misleading investors? There are many analysts that cover this company such as Robert W. Baird, and RBC Capital Markets which have been giving good guidance for this company. Taposh Bari himself knows this, why can’t he just drop his coverage and move on to another company that he can understand better? Why he continues to provide his opinion on Lululemon baffles and peeves me.