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lululemon vs. Under Armour: Which Stock Is Set For a Good Run?

The demand for athleisure wear or athletic clothing that can transition more easily between leisure and exercise has seen an upward trend. This trend was pronounced during the pandemic, as
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The demand for athleisure wear or athletic clothing that can transition more easily between leisure and exercise has seen an upward trend. This trend was pronounced during the pandemic, as more people worked from home and wanted to trim down their wardrobes.

According to a Linchpin report, the athletic wear market in the U.S. is expected to be worth $69.2 billion this year and is likely to account for 36% of global athletic wear sales.

Using the TipRanks Stock Comparison tool, let’s compare two athletic wear companies, lululemon Athletica and Under Armour, and see how Wall Street analysts feel about these stocks.

I am neutral about both stocks listed in this article.

lululemon Athletica (LULU)

lululemon is a designer, distributor, and retailer of athletic apparel and accessories. The company primarily conducts business through two channels: company-operated stores and a direct-to-consumer e-commerce website, lululemon.com.

LULU's shares shot up 13% in pre-market trading as the company delivered an earnings beat in the second quarter and consequently raised its guidance. LULU posted net revenues of $1.5 billion, a jump of 61% year-over-year and beating consensus estimates of $1.33 billion.

The company reported adjusted diluted earnings of $1.65 per share versus $0.74 per share in the same quarter last year. Analysts were expecting adjusted earnings of $1.18 per share.

Meghan Frank, lululemon Athletica’s CFO stated, “Our performance in Q2 was driven by a strong response to our product offering, improving productivity in our stores, and sustained strength in e-commerce. While we continue to navigate the COVID-19 environment, including supply chain headwinds, I'm excited with our momentum as we head into the second half of the year and pleased to be able to increase our guidance.”

The company has projected net revenues to vary between $1.4 billion to $1.43 billion for Q3 and for FY21, to be in the range of $6.19 billion to $6.26 billion. Adjusted diluted EPS is expected to come in between $1.33 to $1.38 in Q3 and for FY21, it is anticipated to range between $7.38 to $7.48. (See lululemon stock chart on TipRanks)

Guggenheim analyst Robert Drbul remained impressed with the growth shown by the company’s e-commerce business. Indeed, LULU’s management stated on its Q2 earnings call that “Comps [comparable sales] increased 4% on top of the 157% increase last year.”

The analyst raised the price target from $450 to $475 (24.7% upside) and reiterated a Buy on the stock following the Q2 results.

The analyst expects that digital penetration will make up around 50% of LULU’s total revenues in 2021, “up from ~30% in 2019, with likely improved margins as the company benefits from heavy, pulled-forward digital-related investments.”

Furthermore, Drbul sees “ample runway for growth in Men's, digital, and Int'l, while LULU continues to deliver strong growth in its 'core' (Women's, stores, North America).”

Indeed, at the company’s earnings call, LULU’s management said that the company’s stores are on a rebound, generating a revenue Compounded Annual Growth Rate (CAGR) of 9% over a period of two years.

Lululemon’s CEO, Calvin McDonald added, “This year, we will likely achieve the goal we set to double our men’s business and we remain on track to quadruple our international business by 2023 if not sooner.”

According to analyst Drbul, other key positives for the stock include no long-term debt and limited seasonality factor for LULU’s products.

Turning to the rest of the Street, analysts are bullish about lululemon, with a Strong Buy consensus rating, based on 10 Buys and 2 Holds.

The average lululemon price target of $456.58 implies 19.8% upside potential from current levels.

Under Armour (UAA)

Under Armour, a manufacturer of athletic apparel, footwear, and accessories, also delivered blowout second-quarter results. The company’s revenues soared 91% year-over-year to $1.35 billion and surpassed the Street’s estimate of $1.21 billion.

Adjusted earnings came in at $0.24 per share, significantly outpacing analysts’ estimates of $0.05 per share. (See Under Armour stock chart on TipRanks)

Under Armour generates revenues from the sales of its products through wholesalers, distributors, and the direct-to-consumer sales channel that includes its brand and factory house stores and e-commerce websites.

Under Armour President and CEO Patrik Frisk said, “We are very pleased with Under Armour's better than expected second-quarter results, which reflect solid progress compared to both 2020 and 2019. Given the continued momentum, we're raising our full-year outlook, which puts us on track to achieving a solid performance in 2021.”

In 2021, UAA expects revenues to grow in the low twenties percentage, driven by a growth rate in the low twenties for sales in North America and a rate of increase in the mid-thirties percentage for the company’s international business.

UAA anticipates adjusted diluted EPS to range between $0.50 to $0.52 versus its earlier expectation of a range between $0.28 to $0.30 per share in FY21.

Following the stellar Q2 results, J.P. Morgan analyst Matthew R. Boss upgraded the stock from a Hold to a Buy and raised the price target from $25 to $30 (35.1% upside). The analyst pointed out the key positives for the stock, including the top-line growth rate of 12% in the first half of the year versus the first half of FY19 and an expansion of 550 basis points in the company’s gross profit margin in H1 of FY21.

The analyst also said that he expects the global sportswear market to grow at a CAGR of 8% between 2021 to 2025, which could benefit the company. Furthermore, Boss pointed out that Nike (NKE), the largest player in the sportswear market, continues to divest from wholesale accounts, “strengthening the full price backdrop.”

In contrast, BTIG analyst Camilo Lyon maintained a Sell with a price target of $15 (32.4% downside) on the stock, following the Q2 results. While Lyon opined that the second quarter was a good one for the company, he said that “the key negative was e-commerce contraction of -18%, which in our view is not an indicator of brand strength.”

The analyst added, “We applaud the profit improvements the company has engineered which look durable; however, we continue to have doubts about the brand's long term sustainable growth trajectory in a post-COVID/normalized inventory world.”

Turning to the rest of the Street, analysts are cautiously optimistic about Under Armour, with a Moderate Buy consensus rating, based on 9 Buys, 6 Holds, and 1 Sell.

The average Under Armour price target of $29.47 implies 32.8% upside potential from current levels.

Bottom Line

While analysts are bullish about LULU, they are cautiously optimistic about Under Armour. Based on the upside potential over the next 12 months, Under Armour seems to be a better Buy.

Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article​.Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post lululemon vs. Under Armour: Which Stock Is Set For a Good Run? appeared first on TipRanks Financial Blog.

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Government

Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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International

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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