Lululemon Shares Charge To 52-Week High On Sterne Agee Upgrade

Analysts from Sterne Agee met with Lululemon Athletica inc. LULU CFO John Currie and raised their rating to Buy from Neutral and initiated a price target of $77 as a result. The analysts, who were skeptical "prior to today," said that "after spending a brief bit of time with the new CFO, we are becoming confident that ongoing margin and sales growth is in the offing."

The stock, which closed 3 percent higher on Tuesday, was gaining another 2.5 percent to $68.05 in pre-market trading.

Specifically, Sterne Agee said it believes that the investments Lululemon is making this year will pay off handsomely in 2016 and perhaps as early as Q4 2015. Those investments include supply chain improvements and a new merchandise planning system. Additionally, Sterne said that the product mix is "evolving well" with the new offerings impressing the analysts compared with prior products.

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The analysts did note that they "remain somewhat concerned" that international expansion is "spread too thin," but said that the CFO assured them that the UK store base will become more concentrated.

Shares of Lululemon gained 19 percent this year as of Tuesday's closing price of $66.41. If pre-market activity holds, the stock will make a new 52-week high on the open.