Lululemon Stock Is Soaring After Earnings. Why Analysts Are Bullish.

Key Takeaways

• Lululemon shares jumped a day after the company delivered third-quarter earnings that beat expectations and raised its full-year outlook.
• Multiple analysts have raised their price targets for Lululemon, pointing to both U.S. and international growth, notably in China.
• Stifel analysts said Lululemon is positioned to add new customers as well as to increase revenue per customer.

Lululemon (LULU) shares rocketed higher Friday, a day after the athletic apparel company beat third-quarter earnings estimates, and analysts have weighed in with bullish price targets. 

Morgan Stanley said the results, plus an improved full-year forecast from the company, “left little for the bears to point to, with US growth stabilizing [and] women’s and China accelerating.” The firm reiterated its “overweight” rating and raised its price target to $414.

Lululemon raised its full-year revenue forecast to between $10.452 billion and $10.487 billion, up from a previous range of $10.375 billion to $10.475 billion.

Analysts Call Lululemon ‘Uniquely Positioned’ for Growth

Stifel analysts lifted their price target to $438 from $370 and maintained a “buy” rating. That represents a roughly 7% premium after Lululemon shares soared 18% to touch an intraday high of about $408 Friday. 

“We see LULU uniquely positioned at the intersection of secular trends and believe international growth contribution is under-appreciated,” Stifel analysts said in a report Thursday. The company is likely set to “sustain strong growth” by adding new customers and increasing revenue per customer. 

The analysts’ optimism comes after Chief Executive Officer (CEO) Calvin McDonald last quarter acknowledged the company’s “newness” problem, with fewer seasonally updated products leading to lower conversion rates.

Recently, Lululemon shares were up about 16% at $401.52 late Friday afternoon, but they have lost more than a fifth of their value in 2024.