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Analysts See More Upside in LULU after Its Strong Holiday Run

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Jan. 18 2019, Published 12:40 p.m. ET

Analyst activity on LULU

On January 17, UBS raised its price target for Lululemon (LULU) stock to $148 from $135. Several analysts see further upside potential in Lululemon stock after the yoga and athletic apparel retailer raised its forecast for the fourth quarter of fiscal 2018 (which ends on February 3, 2019) on January 14 following strong holiday sales.

On January 16, Morgan Stanley raised its price target for LULU to $141 from $138. On January 15, Cowen and Company raised its price target to $188 from $185. Canaccord Genuity raised its price target to $163 from $161, and Credit Suisse raised its price target to $172 from $170 on January 14. 

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Even prior to the update it provided on January 14, Lululemon stock was in focus due to the revisions to its price target made by certain analysts. On January 2, Wells Fargo lowered its price target to $175 from $200. On January 7, Deutsche Bank increased its price target to $165 from $164. On the same day, UBS lowered its price target to $135 from $165.

Stock movements

Lululemon stock rose an impressive 54.7% in 2018. The stocks of its larger peers Nike (NKE) and Under Armour (UAA) were up 18.5% and 22.5%, respectively, last year. Lululemon’s better-than-expected performance in each of the first three quarters of fiscal 2018 boosted investors’ confidence in its stock.

Lululemon and its peers outperformed the S&P 500 Index (SPY), which fell 6.2% in 2018 due to a variety of factors, including concerns about the Fed’s monetary policy and US-China trade tensions.

On January 14, Lululemon stock rose 5.7% in reaction to the company’s positive update about its fourth-quarter guidance. As of January 17, Lululemon stock was up 19.3% since the start of 2019. The average 12-month price target for Lululemon stock is $161.31, implying a potential upside of 11% in the next 12 months compared to its closing price on January 17.

Lululemon’s focus on innovation, strong e-commerce sales, and international expansion are expected to boost its performance. We’ll discuss the company’s strategies in detail in the next article.

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