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Both Nike (New York Stock Exchange: NO) and Lululemon Athletica (NASDAQ: LULU) were launched at Sell at Redburn ahead of the earnings results from the two apparel makers in late March.
While both were hailed as “excellent” and “fantastic” brands, the revenue growth of each remains in doubt, especially internationally. the cousin The valuation of each leaves the disadvantage more pronounced as well, according to analysts.
“International growth and category expansion bring additional complexity, cost and capital,” the Lululemon startup explained. “This next stage will test the company’s ability to maintain current luxury goods rate margins and consequently the degree of premium valuation.”
The team assigned a $257 price target to the stock along with a Sell rating.
Nike (NKE) was also a new sale, driven largely by international concerns. In Nike’s case, sales trends are most worrisome in China, which needs to make a “sharp turning point” to offset slower expected growth in North America. Margins are also expected to disappoint as the company continues to invest in DTC’s efforts and promotional activity persists.
The Oregon-based shoe and apparel giant got its start in Sell. Redburn assigned a $100 price target on the stock.
Read more about Nike’s earnings expectations next week.
