Apparel retailer Lululemon (NASDAQ:LULU) notched up a little over 1% in premarket action, which has continued—and then some—into this morning's trading session so far. The biggest reason stems from new love from a market analyst which saw upgrades on two different fronts. New products are also giving Lululemon a hand up, and the latest word from the financial analyst sector is strongly in favor of buying in.
Lululemon Stock Gains Ground With Analysts
The latest reports came from Goldman Sachs, who initiated coverage on the company, declaring it to be a “buy” with a price target of $447 per share. Goldman also added Lululemon to its “conviction buy” list, a list of stocks specifically chosen by Goldman Sachs researchers as being likely to outperform the market.
Goldman Sachs analysts noted that the post-Covid recovery period has been especially noteworthy for two kinds of stocks: apparel brands and companies with strong overall brands. Lululemon seems to have both of these points together in the same package, making it especially attractive. While some find this a questionable approach—especially with office workers increasingly returning to their offices by personal desire or corporate dictate—others note that Lululemon in particular has been branching out, which can help improve its prospects. Goldman expects both strong growth and expansions in margins for the company, but notes that share price gains have already been quite substantial so far this year so a note of caution is called for.
Indeed, Lululemon has been stepping up product offerings at a rapid pace. Recently, Lululemon revealed its work on a yoga mat made with Mylo, a “vegan leather” substance made mainly from mushroom root structure. Lululemon also has plans to release a new running bra as well as a new kind of polyester made from waste gases. Just to round things out, Lululemon's Mirror fitness brand is also poised to get an upgrade to its marketing, as Mirror appointed Known as its agency-of-record, with work set to emerge this October, reports noted.
How Do Financial Analysts Feel About LULU Stock?
The Lululemon stock forecast, based on the latest word from financial analysts, is looking fairly bright as analysts currently hold a consensus “buy” rating on the stock. That rating has held steady for the last two years as well.
A year ago, Lululemon stock had two “strong buy” ratings to its credit, along with 22 “buy” ratings and nine “hold.” Six months ago, that shifted to one “strong buy”, 21 “buy” ratings and 10 “hold.” Today, however, we sit at two “strong buy”, 18 “buy” and eight “hold.” The recovery in the “strong buy” ratings is a substantial support to the overall “buy” recommendation, and though the “buy” side has been declining for the last year, “hold” side pressures have dropped similarly in the last six months.
The Lululemon stock price target, meanwhile, is in a fairly broad range. The consensus price target is $394.69, with a high of $500 and a low of $275. With Lululemon currently trading around $380 per share, there's still upside potential to be had here.
Recent analyst moves for Lululemon have been somewhat mixed. That low price target of $275 dates back to December 2020, when BMO Capital Markets raised its price target from $228 to that new $275 figure. The early part of 2021 featured a few lowered price targets, as MKM Partners, Robert W. Baird, and Cowen all lowered their targets, and B. Riley, Morgan Stanley, and Piper Sandler all followed suit recently. However, several analysts raised price targets, including Deutsche Bank Aktiengesellschaft, BTIG Research, Wells Fargo and Barclays. In fact, Goldman Sachs isn't the only analyst to start coverage at a high point, either; KGI Securities, about a week ago, started coverage on Lululemon, declaring it an “outperform.”
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