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D.A. Davidson Upgrade Lululemon Athletica, Encouraged By Accelerated Growth Trajectory

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In a report published Tuesday, D.A. Davidson analyst Andrew Burns upgraded Lululemon Athletica (NASDAQ: LULU) to Buy from Neutral, raising its price target from $67.00 to $73.00.

According to the report, the price target rise is based on 25x the analysts 2015 estimate. We are raising our valuation multiple to reflect increased conviction in LULU's ability to deliver a multi-year accelerated growth trajectory. It is believed the shares can outperform as product issues are resolved, international growth initiatives accelerate and investor sentiment improves.

“Despite 2013 hiccups, the lululemon brand remains the leader in an attractive category. Consumer interest in lululemon remains incredibly high,” the report said “Over the holidays, LULU stores were consistently one of the most crowded and exciting stores at each shopping location we visited. Athletic brands as well as new entrants are making the category more competitive, but LULU remains the benchmark from both a product style and quality standpoint. This leadership position was dented in 2013, but with new management and improved internal controls, we believe the supply chain and PR troubles of 2013 are surmountable.”

Some highlights from the report included:

-Expectancy of ICR XChange to kick off an investor sentiment and operational rebuilding phase. - Approachable valuation and viable long-term growth potential create an attractive investment opportunity.

LULU closed Monday at $57.78 with shares trading down at 1.70 percent.

Latest Ratings for LULU

DateFirmActionFromTo
Jan 2021Morgan StanleyMaintainsEqual-Weight
Dec 2020Morgan StanleyMaintainsEqual-Weight
Dec 2020Raymond JamesMaintainsStrong Buy

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View the Latest Analyst Ratings

 

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Posted-In: Andrew Burns D.A. Davidson & Co.Analyst Color Upgrades Analyst Ratings

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