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Lululemon Gets Price Target Boost From J.P. Morgan

Analyst Matthew Boss, who has an overweight rating on the stock, assigns a $415 price target to Lululemon's shares.
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Lululemon Athletica  (LULU) - Get lululemon athletica inc. Report saw its target share price boosted Monday by a J.P. Morgan analyst who also added the the athletic apparel retailer to the firm's Analyst Focus List.

Shares of the Vancouver, Canada-based company were up 1.7% to $339.65 in trading Monday.

Analyst Matthew Boss, who has an overweight rating on the stock, assigned a $415 price target to the company's shares, up from $387, and above Wall Street's average price target of $364.42.

Boss said in an investors' note the price hike was based on several factors, including 12.4% revenue growth, which exceeded management's mid-to-high single digit guidance, flat gross processing margin, and more than 24% dollar growth in selling, general and administrative expenses.  

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"Importantly," he said, "our recent fieldwork points to potential upside to our +6-7% above-Street embedded 3Q comp estimate based on mid-September top-line acceleration (w/ momentum sustained in October) and incremental bottom-line flow-through opportunity."

With Lululemon's brand still having a "place domestically and international an untapped opportunity," Boss continued, "our top-line build points to $5B+ brand (vs. ~$2.0B in FY15) supported by (1) significant untapped International presence, (2) outsized growth of men's (3) a push into newer categories such as personal care, and (4) ongoing growth in the e-commerce business to augment low-double digit growth in the core North America’s business (i.e., women’s, stores)."

Carolyn Boroden, writing for Real Money, said her price targets for Lululemon come in at $430.55 and then $469.54.

"Bottom line," she said. "As long as price remains above the $314.72-$318.27 area, I'm willing to be a buyer of LULU and look for those higher targets."