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Lululemon Athletica’s (NASDAQ:LULU) price target was raised to $450 from $410 at BofA by its analysts on Thursday, who claimed that management meetings highlight confidence in the company’s sales and margin trajectory.
The analysts, who reiterated a Buy rating on the stock, explained that BofA hosted meetings in Chicago and Minneapolis with Lululemon’s management.
“We reiterate our Buy rating as we think the stock remains compelling given our expectation for a robust sales and earnings trajectory,” they wrote, adding that the price target increase reflects increased confidence in the outlook.
Lululemon “continues to evolve,” with membership gaining traction and China a “key near and long term driver,” claim the analysts.
“The membership program is unique as it offers access to digital workouts and in-person events instead of leading with a discount. It allows LULU to gather data and subsequently offer a more personalized experience both in-store and online. It is surpassing expectations in its first few quarters.” they added.
“LULU accelerated its China (8% of sales) store openings in F22 despite disruption from COVID, which sets them up to grow via normalizing COVID trends and a ramp in-store productivity. The region is the most profitable outside of North America, but we see room for it to surpass the high NA margins with scale given lower rent and labor costs.”
