Lululemon Athletica Inc. has been upgraded to outperform from market perform at Wells Fargo based on the belief that the company has made "meaningful improvements" to its supply chain. Analysts said in a note published Monday that there are a number of benefits to the company's more-efficient supply chain including lower product costs, fewer markdowns, and less reliance on air freight. Supply chain improvements "should begin to take hold in 2016" the bank said, which will eliminate frequent quality issues and production delays. Analysts have growing confidence in the company's margin goals, and believe the strength of the brand coupled with the continued "athleisure" trend gives Lululemon "top-line momentum." Shares of Lululemon are down 5.2% over the past 12 months while the S&P is down 0.7%.
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