The stock recently traded at $373, down 1.29%; it has soared 63% year to date through Thursday.
“We have to ask ourselves if we can realistically recommend buying LULU at $400 with a call it can go to at least $460 over the next 12 months,” Lejuez wrote in a commentary, according to Bloomberg. “We just can’t do it.”
Lejuez remains a fan of the company, lauding its growth opportunities. But the stock “seems to be pricing in perfection,” he said.
Lululemon is scheduled to report earnings after the market closes Tuesday, Sept. 8.
In June, Lululemon announced it is acquiring Mirror, an in-home fitness company, for $500 million.
The sportswear maker said in a statement that the acquisition “will bolster the company’s digital sweat-life offerings and bring immersive and personalized in-home sweat, and mindfulness solutions to new and existing lululemon guests.”
Mirror offers weekly live classes and on-demand workouts as well as one-on-one personal training. With millions of Americans stuck at home because of the Covid-19 pandemic, home exercise and training offerings have been seeing growing demand from consumers.
“We see potential in the Mirror acquisition, although the price appears steep and it is a departure from Lululemon’s organic growth model,” Morningstar analyst David Swartz wrote after the deal was announced.
He likes Lululemon, giving it a narrow moat, but thinks its fair value is closer to $142, less than half its current price.