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Wall Street’s View: Lululemon Stock Has a Modest Upside

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Mar. 23 2018, Updated 9:01 a.m. ET

Wall Street’s view on LULU

In the final part of this five-part series, we’ll look at Wall Street’s current recommendations on Lululemon Athletica (LULU). LULU has an average rating of 2.3 on a scale where one is a “strong buy,” and five is a “strong sell.” Sportswear players Nike (NKE) and Columbia Sportswear (COLM) have similar ratings of 2.4 and 2.2, respectively. Under Armour (UAA), on the other hand, is rated a 3.2, while Skechers (SKX) has received a rating of 1.5.

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Out of the 31 analysts covering the stock, 58% of analysts have recommended buying the stock, while 39% have suggested holding it. Only 3% of analysts recommend a “sell” on the stock. In comparison, there are no sell recommendations on Colombia Sportswear and Skechers, while 6% of analysts suggest selling Nike. Under Armour has received a “sell” rating from 35% of analysts.

Price target

Lululemon is currently trading at $81.48, around 3% below its 52-week high price. Wall Street sees a moderate upside to its stock price and has assigned a price target of $84.33, reflecting an upside of ~4%. Nike and COLM have similar upsides and are projected to rise around 3% over the next 12 months. In comparison, UAA’s stock price is projected to fall 11%, while Skechers stock is expected to increase 20%.

Recent analyst actions

On March 13, Credit Suisse initiated coverage on Lululemon with an “outperform” rating. Analyst Michael Binetti assigned a target price of $96 to the stock, reflecting an 18% upside to the March 19 trading price. “LULU is a rare example of a brand of this size that has protected its price integrity by avoiding reliance on recurring promos & outlet/off-price for growth,” noted Binetti.

ETF investors seeking to add exposure to LULU can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 0.4% of its portfolio in LULU.

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