Please ensure Javascript is enabled for purposes of website accessibility

Is Lululemon About to Shoot 12% Higher?

By Eric Volkman – May 29, 2020 at 9:46PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock has been on fire lately, and a noted analyst thinks it'll only get hotter.

Most yoga studios and health clubs remain closed. Regardless, investors are flocking to buy shares of athleisure-wear specialist lululemon athletica (LULU -6.88%), to the point where the shares hit an all-time high on Friday.

Analyst Matthew McClintock of Raymond James thinks they could go even higher. On Friday, he significantly lifted his target price on the stock to $335 per share from the previous $250. The new level is nearly 12% above the latest closing price.

Facade of a Lululemon store in Manhattan.

Image source: lululemon athletica.

McClintock's rationale is that Lululemon, despite a fairly sturdy and long-tail position on its market, continues to push into new areas to keep its customers interested and returning to its stores. "We believe LULU's dominance in the growing athletic apparel market will continue to increase as its innovation machine continues to deliver exciting and unique product to its loyal customer base," the analyst wrote in a research note.

As a result, he believes Lululemon will do a relatively good job of weathering the current economic slowdown caused by the SARS-CoV-2 coronavirus outbreak, which has shuttered a great many retail stores throughout the world. In his analysis, McClintock substantially revised his estimate for the company's comparable-store sales decline in its Q1 of fiscal 2020 to 14% from the previous estimate of a 24% fall.

These adjustments could be helping to fuel the rally in Lululemon stock. On Friday, it well exceeded the gains of the broader stock market by rising 5.5%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lululemon Athletica. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lululemon Athletica Inc. Stock Quote
Lululemon Athletica Inc.
$279.56 (-6.88%) $-20.66
Raymond James Financial, Inc. Stock Quote
Raymond James Financial, Inc.
$98.82 (0.90%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.