Lululemon Stock Gains as Truist Upgrades to Buy Ahead of Analyst Day
2022.04.19 15:32
Lululemon (LULU) Stock Gains as Truist Upgrades to Buy Ahead of Analyst Day
Shares of Lululemon Athletica (NASDAQ:LULU) are up almost 2% in pre-open Tuesday after Truist Securities analyst Beth Reed upgraded to Buy from Hold.
A new price target on LULU stock is $495.00 per share, up from $390.00.
The upgrade call comes with the expectations that Lulu will introduce a new 5-year financial outlook at the April 20th analyst day.
“We see the company likely providing a similar outlook as in 2019, including a low-teens revenue CAGR, modest EBIT margin expansion and a mid-teens EPS CAGR. We see this scenario as resulting in ~$17 in EPS by 2026 and a $595 stock at the current multiple (~55% upside) or a $765 stock at our target multiple (~100% upside),” Reed said in a client note.
According to Reed, LULU’s momentum is driven by (1) consumer prioritization of health & wellness, (2) a growing TAM, (3) improved store traffic/inventory levels and (4) modest go-forward EBIT margin expansion.
The analyst also sees LULU being able to pass on product cost inflation.
Net-net, Reed sees current levels “as an attractive entry point for what we view as a quality long-term growth story.”
By Senad Karaahmetovic
