Lululemon Athletica (LULU) stock opened the week with some positive news on its side as Argus Research analyst John Staszak said Monday that the "athleisure" firm's prospects are “among the best in the apparel sector.”
“Lululemon has a strong brand and growing direct-to-consumer sales, which we expect will lead to higher margins over the next several years,” Staszak says in a Monday research note on LULU stock. “In addition, we expect revenue growth from the expansion of the company’s men’s clothing line. With relatively few stores outside North America, the company also has substantial opportunities for international expansion, particularly in China.”
Staszak also maintained a $530 price target that implies nearly 30% upside over the next 12 months.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Lululemon is coming off a Street-beating Q3 report last week that saw profits jump nearly 40% year-over-year to $1.62 per share, thanks in large part to a 23% increase in direct-to-consumer revenues. Net revenues of $1.45 billion were up 30% year-over-year, including a 27% improvement in comparable-store sales. All of this topped analyst expectations.
The upgrade comes amid a decent-but-not-great 2021 for LULU stock. Shares have flipped between underperforming and outperforming the S&P 500 throughout the year. A recent tumble has brought Luluemon's year-to-date gains to 18%, compared with more than 25% for the index.
Staszak says that Lululemon's success has welcomed competition from firms ranging from Nike (NKE) and Adidas (ADDYY) to Nordstrom (JWN) and Dick's Sporting Goods (DKS).
He also notes that LULU stock trades at 42 times Argus’s 2023 earnings estimates, so it’s hardly cheap. But shares “deserve to trade at higher multiples given the company’s increasing comp sales, strong brands, and prospects for continued growth,” he says.
Argus Research is in the majority as it pertains to its bullish sentiment on Lululemon shares. LULU stock currently garners 14 Strong Buys and five Buys from the analyst community, versus 10 Holds and just 1 Strong Sell.
However, the Street isn't as optimistic as Staszak about LULU's upside. A consensus price target of $463.37 implies 13% returns over the next 12 months or so.
-
Dow Adds 646 Points, Hits New Highs: Stock Market TodayIt was "boom" for the Dow but "bust" for the Nasdaq following a December Fed meeting that was less hawkish than expected.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
If You'd Put $1,000 Into Coca-Cola Stock 20 Years Ago, Here's What You'd Have TodayEven with its reliable dividend growth and generous stock buybacks, Coca-Cola has underperformed the broad market in the long term.
-
If You Put $1,000 into Qualcomm Stock 20 Years Ago, Here's What You Would Have TodayQualcomm stock has been a big disappointment for truly long-term investors.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
-
Stocks Slip as Job Growth Stalls: Stock Market TodayThe August jobs report came in much weaker than expected, while the unemployment rate ticked higher.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
