Keybanc Capital Markets stepped to the sidelines on Lulu’s Fashion Outlet Holdings (NASDAQ:LVLU) on Monday.
The firm’s analysts indicated that there is less enthusiasm on the name due to tougher comparisons into 2023, as well as a lingering inventory overhang.
“Inventory remains high at +110% year over year (as of 3Q) and consumer demand has softened, which we think will continue to pressure margins in the [near-term] as the company navigates a more promotional environment,” the team explained. “Though LVLU has a [long-term] opportunity within its test and reorder model, we’d look for improving inventory positions and a more stable retail environment [near-term] to gain confidence.”
As such, the team cut their rating to Sector Weight from Overweight. Keybanc’s analysts also lowered their net revenue forecast for 2023 to $458.1M from $548.2M and trimmed their adjusted EBITDA expectations to $35.6M from $55.6M.
You into sell-side ratings on the stock.