NEW YORK (TheStreet) -- Shares of Lululemon Athletica Inc (LULU) are rising, up 0.79% to $64.07 in early market trading Monday, after the yoga apparel retailer had coverage initiated by analysts at RBC Capital Markets this morning.
The firm started Lululemon with an "outperform" rating and a price target of $77 on shares.
RBC Capital also initiated coverage on other retail stocks this morning.
The firm issued an "outperform" rating on shares of American Eagle Outfitters (AEO) with a $20 price target, and on Urban Outfitters (URBN) with a $48 price target. The firm started coverage on Abercrombie & Fitch (ANF) with an "underperform" rating with a price target of $17.
Canada-based Lululemon Athletica offers a range of yoga-inspired performance apparel and accessories for women, men and female youth such as fitness pants, shorts, tops and jackets, which are designed for healthy lifestyle activities.
Insight from TheStreet's Research Team:
Luluemon Athletica is a core holding of Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. During the most recent weekly roundup, this is what Jim Cramer, Portfolio Manager & Jack Mohr, Director of Research - Action Alerts PLUS had to say about the stock:
We spent some time this week looking at key drivers of LULU's value. The biggest factor driving the company's rapid growth is extremely high retail productivity, some 2-3x as much as its competitors. The high retail productivity is an outcome of several successful retailing strategies, including strong inventory management, utilization of customer feedback to improve product quality, and the quick renewal of products. Another factor critical to the company's profitability is its high-margin products. LULU clearly targets higher-end consumers with the highest quality products, and as a result is able to price its apparel well above the likes of Nike (NKE), Under Armour (UA), and Adidas. Additionally, LULU has spread out its manufacturing base in such a way that it has the flexibility to keep its cost of goods sold down in case of rising labor or commodity costs. This allows the company to post strong margins -- we see upside to 36% EBITDA margin estimates for the year. Our target is $80.
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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 revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
You can view the full analysis from the report here: LULU Ratings Report