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Is Lululemon Making A Comeback?

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Is Lululemon Making A Comeback?

On Monday, the broader market suffered a decline as investors began to get jittery about volatility in China, the Federal Reserve's interest rate increase and valuation concerns.

However, luxury athletic apparel retailer Lululemon Athletica inc. (NASDAQ: LULU) posted massive gains, with shares rising 6.46 percent, after analysts at both Wells Fargo and Jefferies upgraded the stock.

2015 Mistakes

Last year, the firm suffered from negative press, infighting among its leaders and concerns about its business model. Over the past six months, the stock has fallen 14.29 percent as investors looked unfavorably on the apparel maker's plans to expand internationally and worried about the firm's profitability. Last year, Lululemon was forced to recall its hoodies because of a dangerous drawstring, and in 2013, the company became the butt of social media jokes when it recalled its yoga pants for being too sheer.

Related Link: Jefferies On Retail: Here Are The Best Ways To Invest In 2016

New Year, New 'Lulu'

However, both Jefferies and Wells Fargo have said that the company has the potential to recover in 2016, as it has made improvements to its supply chain and remains one of the strongest brands in the activewear space.

Athletic apparel is expected to remain popular in the coming year, and Lululemon has demonstrated that it has its finger on the pulse of what's fashionable in that category.

Still Some Doubt

While the stock has received a lot of positive attention going into the new year, some are still exercising caution. Analysts at D.A. Davidson acknowledged Lululemon's potential to improve margins, but cited a lack of confidence in the firm's ability to execute as a reason to maintain a neutral rating. For those who want to play the growing popularity of activewear, Davidson recommends more established firms like Nike Inc (NYSE: NKE) or Under Armour Inc (NYSE: UA).

Image Credit: Public Domain

Latest Ratings for LULU

DateFirmActionFromTo
Jul 2020BairdMaintainsOutperform
Jun 2020UBSMaintainsNeutral
Jun 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for LULU
View the Latest Analyst Ratings

 

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