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Lululemon 'Continues To Make The Right Investments,' Citi Says In Upgrade

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Lululemon 'Continues To Make The Right Investments,' Citi Says In Upgrade

Lululemon Athletica inc. (NASDAQ: LULU) is a brand on the rise, according to Citi. 

The Analyst 

Analyst Paul Lejuez upgraded Lululemon from Neutral to Buy with a $152 price target.

The Thesis

In recent months, fears of a macro slowdown have taken winning brands down with the rest of the group and Lululemon has been a victim, Lejuez said in the Wednesday upgrade note.

Yetthe story remains one of improving fundamentals and standout growth prospects, the analyst said. 

“We get the macro concerns, but we think this is a brand to own in uncertain times — one with the strongest brand positioning, comp momentum, international prospects, margins and ROIC in our coverage."

Lululemon has delivered high-teen comps several quarters in row, but no specific product is responsible for the brand's momentum, he said. 

“LULU continues to post strong comps in developed categories, is developing loyalty with men and has permission from women and men to expand into new categories. They have made the right investments over the past several years to put them in this enviable position today, and they continue to make the right investments to drive continued impressive comp/sales results in the future."

It's important to view Lululemon’s comp increases in a broader context of the company taking the business to new levels rather than facing tough comparisons driven by any one particular product, the analyst said.

Lululemon remains a brand that is still on the rise, but now at a lower price, providing an attractive entry point, according to Citi. 

Price Action

Lululemon shares were up nearly 5 percent at $122.65 at the time of publication Wednesday.

Related Links:

Lululemon Has Room For Valuation, Earnings Upside This Year

Analyst Stretches Lululemon's Price Target After Meeting With New CEO

Latest Ratings for LULU

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

View More Analyst Ratings for LULU
View the Latest Analyst Ratings

 

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