NEW YORK (TheStreet) -- Shares of Lululemon Athletica (LULU) - Get Report are up 3.95% to $66.28 in pre-market trading Friday after analysts at JPMorgan Chase upgraded the fitness apparel company to "overweight" from "neutral" this morning.
The firm also raised its price target to $75 from $50, saying recent field work has indicated positive traffic and demand trends while Lululemon management lays the foundation for sustainable growth.
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Separately, TheStreet Ratings team rates LULULEMON ATHLETICA INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LULULEMON ATHLETICA INC (LULU) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 17.1%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LULU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.36, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to its closing price of one year ago, LULU's share price has jumped by 25.90%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- Net operating cash flow has significantly increased by 79.50% to $42.86 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 68.70%.
- The gross profit margin for LULULEMON ATHLETICA INC is rather high; currently it is at 54.05%. Regardless of LULU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LULU's net profit margin of 14.41% compares favorably to the industry average.
- You can view the full analysis from the report here: LULU Ratings Report