TD Cowen Flags 250 Basis Point Margin Risk for Lululemon Athletica (LULU)

Lululemon Athletica Inc. (NASDAQ:LULU) ranks among the most active stocks to buy according to Wall Street analysts. On September 5, TD Cowen reduced its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $220 from $298, retaining a Buy rating on the sports clothing retailer’s shares. The firm made the change after finding that 66% of Lululemon’s e-commerce orders in the United States are completed via Canada, making use of the de minimis loophole, which the Trump administration recently closed.

This proportion, according to TD Cowen, is “far higher” than expected and gave Lululemon Athletica Inc. (NASDAQ:LULU) a large financial boost of roughly 250 basis points of “unsustainable annual benefit to gross margin.”

According to the firm, Lululemon Athletica Inc. (NASDAQ:LULU) had clear financial incentives to fulfill orders from Canada under the old regulations, even though the company still retains “ample distribution center and ship from store capacity” in the United States.

Lululemon Athletica Inc. (NASDAQ:LULU), a Canadian athleisure company founded in 1998, designs, develops, and distributes a variety of sportswear, accessories, and footwear.

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Disclosure: None. This article is originally published at Insider Monkey.