Lululemon Price Targets Raised by 2 Analysts Following Recent Surge

While Wells Fargo cut its rating on Lululemon, its analyst wrote the company has shown 'far and away the best performance' in Wells' retail group.
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Shares of Lululemon Athletica  (LULU) - Get Report dipped Tuesday morning despite two analysts raising their price targets for the athletic apparel maker, with one of them also cutting his rating to equal weight from overweight.

That was Wells Fargo analyst Ike Boruchow, who wrote in a report that the stock’s surge since mid-March means a more balanced risk/reward equation, given there’s still “plenty of risk in the consumer environment ahead,” Bloomberg reports.

That risk, of course, stems from the weak economy and the coronavirus pandemic. Lululemon stock has soared 121% since bottoming March 16. Lululemon, which went public in 2007, is trading close to a record high of $306.07 after falling 0.8% on Tuesday morning. 

The stock has shown “far and away the best performance” in Wells Fargo’s retail group, Boruchow said.

Despite the downgrade, Boruchow views Lulumon as a “high-quality best-in-class brand,” thanks to its strong digital operation, the buoyancy of the athletic apparel category and impressive liquidity and margins.

Boruchow raised his share-price target to $275 from $250, reflecting the stock’s recent jump. That raised price target is 11% less than Lululemon's current share price. 

Meanwhile, BofA Securities analyst Rafe Jadrosich lifted his target for Lululemon to $230 from $220 and affirmed his buy rating. Jadrosich's raised price target is roughly 26% below the company's current share price. 

Morningstar analyst David Swartz also likes the company.

“While the COVID-19 crisis is a short-term impediment to its momentum, we believe Lululemon continues to benefit from a major fashion trend and will continue to achieve premium pricing due to the brand’s popularity and the styling and quality of its products,” he wrote in a commentary at the end of March.

“Our narrow-moat rating is based on Lululemon’s intangible brand asset.”

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