Lululemon Athletica Has A Strong Case For Growth, Says Analyst

Raymond James analyst Rick B. Patel initiated coverage on Lululemon Athletica Inc LULU with a Strong Buy rating on the shares and a price target of $345.
The analyst says Lululemon is one of the best qualities and highest margin names in Global Brands.
Through the survey conducted by his team, Patel notes strong shopping behavior in the past three months, very healthy purchase intent for the holidays, and brand affinity.
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He added that Lululemon’s operating margin is likely to expand modestly on an annual basis, and the revenue should double from 2021 – 2026, in-line with its long-term plan.
The drivers include quadrupling international, doubling digital, doubling men’s, growing core +LDD% and TAM expansion.
The analyst cited Lululemon is already a fully DTC business (digital is 44% of total revenue).
Beyond Women’s yoga pants, there is great progress being made as a dual-gender lifestyle brand, he added.
The analyst also sees strong adoption for the LULU mobile app.
The possible risks for the company include gross margin headwinds in the near term, elevated inventory in the Athletic category, and premium valuation.
Price Action: LULU shares are trading higher by 0.16% at $295.98 on the last check Thursday.
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