Lululemon shares up following analyst upgrade

Shares of Lululemon Athletica Inc. rose in trading Friday after a Goldman Sachs analyst upgraded shares of the Canadian athletic apparel company.

Analyst Michelle Tan upgraded shares of Lululemon to "Buy" from "Neutral," saying the company is in a growth phase that should pay off.

Lululemon is relatively new to the U.S. market and has potential for sales growth as brand awareness builds, Tan wrote in a research note. She said the economic conditions are becoming more "benign," which could improve sales. Additionally, the company has improved its real estate and inventory position, and it has moved past a period of overly aggressive expansion and leadership transition. The company's CEO, who led Lululemon through its early days, retired last year. The company brought on a new chief executive along with other key leaders.

"We see execution swinging from high risk to high opportunity," she wrote.

Additionally, foreign exchange rates _ which have been a drag on the company recently _ appear to be changing as the dollar weakens and may benefit Lululemon by the fourth quarter.

Goldman Sachs raised its estimates for 2009, 2010 and 2011 and in turn, raised its price target to $17 from $9.50.

Shares of Lululemon rose 66 cents, or nearly 5 percent, to $14 by early afternoon trading Friday.