Lululemon Gains In Face of Weak Indexes, Bearish Comments from UBS

Shares of Lululemon (NASDAQ: LULU) are higher 1.6 percent to $48.42 in the face of weak broader indexes and bearish comments from UBS.

Analyst Roxanne Meyer believes selling, general and administrative expenses, as well as product and sourcing issues remain an overhang to the company.

The analyst expects Lululemon to step up investments in “supply chain/quality control, ecommerce, international expansion, design talent, and marketing” from last year's already significant investments.

“Should comps remain muted,” heightened investment could be a “sizable pressure point,” Meyer said.

While Meyer believes Lululemon is “a solid long-term growth story,” near-term risks are keeping her on the sidelines. The analyst believes new management will need time to “gel."

Meyer has a Neutral rating and $46 price target on the stock.