Analyst Paul Trussell reiterated his Buy rating and pegged a $402 price target on Lululemon [$LULU], while also emphasizing it as a near-term investment idea, based on the unforeseen strength of sales this Christmas.
“Lululemon was a relative outperformer during a mixed Holiday shopping season due to product newness, especially in seasonal wear, and ongoing momentum in the athleisure category,” Trussell says.
The company is set to post a Q4 update next week, and Paul expects an increase in guidance for total sales growth to the low 20% range, up from a previous forecast for growth in the mid-teens. That would be comfortably above the average analyst forecast of 13.6%.
Trussell’s research indicates lower promotions during the holidays, along with robust momentum for Lululemon’s at-home fitness business, Mirror. He also points out the recent blowout results from Nike [$NKE], which allowed the stock to pop despite high expectations and valuation—he believes Lululemon can follow suit. Nike Earnings Expectation: Yuge
Additionally, Trussell outlined that this could be the perfect time to go long the stock. Lululemon rose more than 55% in 2020, but it has since dipped 5% over the past month. It has also tumbled about 11% from all-time high’s in September of last year, when it traded just under $400.
Lululemon was up 1.9% in recent trading to $363.07. The company reported strong Q3 results in December, and Trussell is far from the only analyst bullish about the stock—especially since not all retailers likely had the same luck this holiday season. Is Adidas Going To Sell Reebok?