Lululemon Athletica Inc. investors are likely to benefit from the company’s swift action on its yoga pants recall, which could mean a rebound sooner than the retailer itself suggested, said Canaccord Genuity analyst Camilo Lyon.
The yogawear retailer could replenish its stock of overly sheer recalled pants by the middle of the second quarter, after indicating to investors it would take until early in the third quarter, Mr. Lyon wrote in a research note titled, “Sheer today, gone tomorrow.”
“Typically in these situations, the turnaround time can be quick once the issue has been determined, and LULU isolated the root cause on April 3. Also, we believe LULU embedded all the downside from the recall into guidance and no potential upside from substitute purchases,” he said.
“The bottom line is we believe demand for LULU gear has not suffered from this transitory quality control issue, and likely benefited from the publicity,” he said. “Based on our store checks, we believe traffic has increased post-recall, further supporting our substitute purchase assertion, which could serve as incremental upside to our estimates.”
Target : Mr. Lyon rates the stock “buy” and has an $87 (U.S.) price target.
RBC Dominion Securities analyst Walter Spracklin cut his target on Air Canada after it pre-released weaker than expected first-quarter results. The airline reported earnings before interest, taxes, depreciation, amortization and aircraft rental (EBITDAR) of $145-million, below the consensus estimate of $176-million.
Target: Mr. Spracklin, who maintains a “sector perform” rating, He cut his target by $1 to $3. The average Street target is $3.80.
UBS analyst Michael Binetti raised his target on Nike Inc., saying stability Nike Inc. should see more stable earnings and cash flow, according to UBS analyst Michael Binetti. With an massive $8-billion (U.S.) share buyback plan, “we see several years of improved visibility of delivery against its long-term target of high single-digit top-line growth and mid-teens earnings-per-share growth.”
Target: Mr. Binetti, who maintains a “buy” rating, raised his target by $5 to $68. The average Street target is $62.58.
Kimberly-Clark Corp. The maker of diapers and paper tissues is no longer a slow growth commodity company, but a packaged goods giant that trades at a valuation below its peers, according to Jason Gere of RBC Dominion Securities. “Underlying fundamentals in the business are still quite sound,” he said, in the wake of the firm beating estimates for first-quarter earnings per share. With defensive stocks in favour, it deserves a valuation similar to its large-cap peers.
Target: Mr. Gere has a $113 target on the shares. The average Street target is $100.39.
Canaccord Genuity analyst Yuri Lynk upgraded his rating on the Caterpillar dealership Toromont Industries Ltd. to a “buy” on price depreciation. “Its significant exposure to more resilient government-funded infrastructure markets should more than offset anticipated mining weakness.”
Target: He is maintaining a target of $24.50. The average Street target is $24.67.Report Typo/Error
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