Wall Street’s view on LULU
In this last part of this series, we’ll look at Wall Street’s recommendation for Lululemon Athletica (LULU).
Wall Street has a neutral view on the company and has rated the stock a 2.4 on a scale of 1 (strong buy) to 5 (sell). In comparison, sportswear peers Foot Locker (FL), Nike (NKE), and Columbia Sportswear (COLM) have received better ratings of 1.9, 2.1, and 2.2, respectively. Under Armour (UAA), however, is among the worst-rated at 2.8.
LULU is covered by 35 Wall Street analysts. Of these, 51% have recommended buying the stock while 43% have recommended holding it. Only 6% of these analysts think the company is currently a “sell.”
In comparison, 3% and 5% analysts suggest selling the stocks of Nike and Columbia Sportswear, respectively, while none recommend selling Foot Locker. Under Armour has 15% sell recommendations.
Lululemon is currently trading at $64.04, ~28% below its 52-week high price. Wall Street expects its stock price to reach $73.81, which indicates an upside of ~15% over the next 12 months. The company’s stock price has been revised by a couple of research houses over the last few days.
Recent analyst actions
On March 9, Canaccord Genuity reduced Lululemon’s target price to $45 from $47 while maintaining the sell rating. The analyst commented in a note, “We believe Lululemon’s focus on yoga bottoms (pants and crops) has been a tremendous asset to comparable store sales growth, but little innovation and only modest design updates to its assortment run the risk of the category becoming a liability.”
On March 8, Deutsche Bank raised the target price to $65 from $64.
ETF investors seeking to add exposure to LULU can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.38% of its portfolio in LULU.