Lululemon Worth $69 Per Share? This Analyst Thinks So

• Although the share price of Lululemon Athletica inc. LULU declined 11.03 over the past one year, it has appreciated 7.76 percent over the past month.
• Susquehanna’s Thomas A. Filandro has maintained a Positive rating on the company, while raising the price target from $59 to $69.
• Although the stock has outperformed significantly since the 3Q15 results were reported, the appreciated appears warranted, given the recent update to the 4Q15 guidance.

Analyst Thoman Filandro mentioned that management had recently updated its guidance for 4Q15, “based higher-than-planned sales and comp, inclusive of a successful Holiday season.”

Filandro also noted that management’s top priority continued to be product innovation, not only to maintain Lululemon’s premium positioning in the market, but also to fuel growth.

In addition, management intends to grow the company’s square footage in the double digits in the foreseeable future.

According to the Susquehanna report, “Continued investments in the DTC channel of distribution, coupled with the development of new capabilities sets the stage for accelerated performance of this high margin channel.”

The company’s long term focus remains on accelerated growth in international markets through store openings in Europe and Asia. The company ended 3Q15 with 6 stores in Europe and 3 in Asia.

“GM opportunity exists based on delivering ~300 bps of product margin improvement off the 2014 pre-forex base,” Filandro added.

The EPS estimate for 4Q15 has been raised to reflect higher sales and comp. The EPS estimates for 1Q16, 2Q16, 3Q16 and 4Q16 have also been raised.