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Lululemon Athletica Inc. Message Board

  • highflier2go highflier2go Aug 15, 2008 2:18 AM Flag

    Be careful shorts ...

    http://www.cnbc.com/id/26200495

    M&A ACTION COMING?

    The news: Options traders have alerted us to more potential M&A activity. For insights we turn to Susquehanna Market Strategist, Stacey Gilbert.

    On the heels of Sketcher’s $142 million bid for Heely’s I'm seeing increased interest in another specialty retailer, explains Gilbert. Specifically, I've noticed heavy call buying on Lululemon Athletica. There’s chatter that Nike could be interested in LULU.

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    • Who needs Nike. Lululemin is the new Nike.. wait 10 years, the lululemon will be as big. Heck they may move into apparel as well and stike it really big. This is a winner company..

    • The HLYS deal translates into an 11x multiple on trailing earnings. LULU is trading at around 40x trailing EPS right now. I think NKE would be interested in LULU as a brand, but you really think they'll pay a premium to the current valuation? Why would they pay more than 40x for LULU when their own stock is trading at 16x trailing? Wouldn't they be better off buying back their own stock? Unless they really believe in the growth of LULU. Thoughts?

 
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