Wall Street analysts weigh in on holding company Tailored Brands Inc (NYSE:TLRD) and clothing giant Lululemon Athletica inc. (NASDAQ:LULU), as recent announcements sent shares of both companies soaring today. Let’s take a closer look:
Tailored Brands Inc
Tailored Brands shares are skyrocketing 39%, as of this writing, as signs emerged that its troubled Jos. A. Bank chain was finally snapping its long streak of sales declines. In reaction, Mizuho analyst Betty Chen upgraded shares of Tailored Brands from Neutral to Buy, with a price target of $25.
Chen noted, “We are upgrading TLRD to Buy from Neutral as we believe JAB’s turnaround along with ability to drive GM from product mix and lower AUC implies margins are at an inflection point. In addition, we believe management’s refined EPS outlook of $1.70-1.85 provides comfort on OCF, dividend payout and minimum debt payment, which should boost stock’s valuation. As we raise our FY17 OpEPS estimate to $1.95 from $1.85 and apply a 13x multiple (group’s at 16x), we derive our new PT of $25 and believe consumer investors’ increased appetite for beta bodes well for TLRD shares.”
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Betty Chen has a yearly average return of -4.4% and a 42% success rate. Chen has a average return when recommending TLRD, and is ranked #3809 out of 4271 analysts.
Out of the 4 analysts polled by TipRanks, 2 rate Tailored Brands stock a Hold, while 2 rates the stock a Buy. With a downside potential of 12%, the stock’s consensus target price stands at $23.25.
Lululemon Athletica inc.
Lululemon Athletica shares are on the run, rising nearly 16%, after the yogawear chain reported third-quarter results that topped expectations with adj. EPS of 47c, beating consensus 43c estimate as both comp and gross margin surprised to the upside.
However, Canaccord analyst Camilo Lyon remains bearish on the stock, reiterating a Sell rating, while slightly increasing his price target to $47 (from $44), which represents a downside potential of 32% from where the stock is currently trading.
Lyon commented, “The company gave cautious commentary on November, stating trends were choppy but then rebounded last week post Thanksgiving and Cyber Monday. We suspect comp trends will moderate off that strong holiday week. Our SELL thesis is predicated on the athleisure trend decelerating as demand for “technical denim” gains momentum and thus disproportionately hurts LULU’s ability to maintain its MSD comp trajectory. While Q3 was better than we anticipated, we did not see anything that would alter our thesis, particularly as we expect the denim trend to materialize in a greater way next year. As such, we reiterate our SELL as we believe the 15% move in the stock after the close skews the risk/reward further to the downside.”
According to TipRanks, analyst Camilo Lyon has a yearly average return of 0.2% and a 50% success rate. Lyon has a -15.3% average return when recommending LULU, and is ranked #2265 out of 4271 analysts.
Out of the 30 analysts polled by TipRanks, 18 rate Lululemon Athletica stock a Buy, 8 rate the stock a Hold and 4 recommend to Sell. With a slight return potential of 2%, the stock’s consensus target price stands at $70.80.
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