Lululemon Athletica Has A Strong Case For Growth, Says Analyst - Lululemon Athletica (NASDAQ:LULU)

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  • Raymond James analyst Rick B. Patel initiated coverage on Lululemon Athletica Inc LULU with a Strong Buy rating on the shares and a price target of $345.
  • The analyst says Lululemon is one of the best qualities and highest margin names in Global Brands.
  • Through the survey conducted by his team, Patel notes strong shopping behavior in the past three months, very healthy purchase intent for the holidays, and brand affinity.
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  • He added that Lululemon’s operating margin is likely to expand modestly on an annual basis, and the revenue should double from 2021 – 2026, in-line with its long-term plan.
  • The drivers include quadrupling international, doubling digital, doubling men’s, growing core +LDD% and TAM expansion.
  • The analyst cited Lululemon is already a fully DTC business (digital is 44% of total revenue).
  • Beyond Women’s yoga pants, there is great progress being made as a dual-gender lifestyle brand, he added.
  • The analyst also sees strong adoption for the LULU mobile app.
  • The possible risks for the company include gross margin headwinds in the near term, elevated inventory in the Athletic category, and premium valuation.
  • Price Action: LULU shares are trading higher by 0.16% at $295.98 on the last check Thursday.
  • Photo Via Wikimedia Commons

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Image and article originally from www.benzinga.com. Read the original article here.