Lululemon Doesn't Like To Discount, And That's Good For Investors

Credit Suisse expects margin growth out of Lululemon Athletica inc. LULU in 2016. The firm pointed to the retailer's outperformance of the industry in discounting and consistent inventory as signs of strength.

The firm reiterated their "outperform" rating and raised the price target to $66.

"We view Lululemon's ability to maintain their full price selling level despite a heavily promotional 4Q retail environment as encouraging and supportive of flow-through to gross margin of supply chain initiatives heading into 2016," the firm wrote in a note Friday.

Lululemon's January markdown intensity rate-the percentage of items on sale multiplied by the average discount- is 2.8 percent, according to Credit Suisse, far less than the industry average of 10-15 percent.

Lululemon shares were trading up 2.6 percent at time of writing off the positive analysis.