Truist Securities upgraded Lululemon Athletica (NASDAQ:LULU) to a Obtain score immediately after obtaining the athletic apparel inventory slotted at Hold.
Analyst Beth Reed noted that valuation on LULU has moderated and the firm expects a strong new five-yr economical outlook at the analyst day event set for tomorrow.
Reed’s bull thesis: “Merged with sturdy model wellbeing and ongoing innovation, we believe LULU has momentum over and above the pandemic, pushed by (1) consumer prioritization of health and fitness & wellness, (2) a escalating TAM, (3) enhanced retailer website traffic/stock ranges and (4) modest go-ahead EBIT margin enlargement. Further more, we perspective LULU’s higher profits client base and pricing electricity as critical belongings in an inflationary ecosystem.”
Truist assigned a rate focus on of $495 to LULU primarily based off a 2022 EPS estimate of $9.30 and 2023 EPS estimate of $11.00. Those marks are a bit underneath the consensus estimates, but a high top quality for LULU is called justified thanks to the firm’s powerful positioning, higher cash flow purchaser foundation and pricing ability, which are claimed to all line up as particularly valuable attributes in an inflationary atmosphere.
Shares of Lululemon (LULU) rose 2.15% in premarket buying and selling to $395.05.
Lululemon (LULU) is a person of the stocks on In search of Alpha’s Catalyst View this week.