Lululemon: A Best-of-Breed Name with Strong Brand Loyalty, Attractive Valuation

By Don Francis, Editor
November 21, 2023 6:49 AM UTC
Lululemon: A Best-of-Breed Name with Strong Brand Loyalty, Attractive Valuation

Truist Securities's Scot Ciccarelli initiated their coverage on Lululemon Athletica (NASDAQ: LULU) with a Strong Buy rating and a $500 price target.

Ciccarelli highlighted the strong brand loyalty that Lululemon enjoys within the activewear industry. According to the analyst, the stock's current valuation presents an attractive entry point for investors, particularly considering its premium relative to peers and the market's historical levels. Despite the prevailing macro pressures and promotional environment, Ciccarelli believes that demand for Lululemon's products and its full-price selling model remain robust.

In addition to the coverage on Lululemon, the analyst also raised their price target on Walmart Inc. by 1.2%, from $168 to $170, while maintaining a Hold rating.

The majority of top-rated analysts share a positive sentiment towards Lululemon, with 91.7% rating the stock as a Strong Buy or Buy. Only 8.3% of analysts see it as a Hold, and there are no recommendations to sell the stock.

Analysts expect Lululemon to deliver earnings per share (EPS) of $9.79 in the upcoming year. If these forecasts hold true, it would represent a year-over-year increase of 23.6%.

Lululemon's stock has performed well in recent times. Since its last quarterly report on July 30, 2023, the stock price has risen by 11.8%. On a year-over-year basis, the stock is up by an impressive 19.2%. Notably, Lululemon has outpaced the broader market represented by the S&P 500, which has seen a 15.2% increase during the same period.

Scot Ciccarelli, the Truist Securities analyst who initiated coverage on Lululemon, ranks among the top 5% of Wall Street analysts, according to WallStreetZen. With an average return of 9.9% and a 64.2% win rate, Ciccarelli specializes in the Consumer Cyclical, Consumer Defensive, and Industrials sectors.

Lululemon Athletica Inc., headquartered in Vancouver, Canada, is a leading designer, distributor, and retailer of athletic apparel and accessories for both women and men. The company operates through two segments: Company-Operated Stores and Direct to Consumer. Lululemon offers a wide range of products, including pants, shorts, tops, jackets, and fitness-related accessories and footwear. Its products cater to a variety of athletic activities, such as yoga, running, training, and other sweaty pursuits. Lululemon sells its merchandise through a network of company-operated stores, outlets, warehouse sales, wholesale accounts, temporary locations, and direct-to-consumer channels via mobile apps and its e-commerce website, lululemon.com. With 574 company-operated stores across multiple countries, including the United States, Canada, China, Australia, the United Kingdom, Japan, and many others, Lululemon has established a strong global presence since its inception in 1998.

What are the top analysts forecasting for LULU?

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