Stock Market

Truist Is Pounding the Table on Lululemon (LULU) Stock

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Among the retail stocks in focus for investors, Lululemon (NASDAQ:LULU) has seen momentum continue. Indeed, LULU stock has increased 1% from yesterday’s close. This bullish move today appears to be the result of an analyst note from Truist, which launched coverage of Lululemon with a “buy” rating and a $500 price target. This target implies upside of around 18% from current levels, which is higher than the consensus target price estimates for the stock.

Truist appears to like Lululemon’s growth profile relative to other retailers in the athletic apparel space. Growth driven by continued expansion in key areas such as men’s, digital and international could spur greater upside than many in the market are pricing in.

In addition to a “buy” rating on Lululemon, Truist also provided a “hold” rating on Under Armor (NYSE:UAA) and Nike (NYSE:NKE), suggesting Lululemon holds a premium position in the market relative to these peers.

Let’s dive into this note and what investors should take away from this news.

LULU Stock Moves Higher on Analyst Buy Rating

Any time analysts adjust their price targets on specific companies, or initiate coverage, many investors pay outsized interest to the related notes. That’s generally because a deep dive analysis on a given stock tends to hold more water when companies provide their initial take. And given the rating from Truist today (and relatively muted opinions of the company’s peers), investors certainly have something to hang their hats on when it comes to Lululemon.

Analysts noted in their coverage of Lululemon that they “believe Lululemon has some of the strongest brand loyalty in the activewear industry as its direct to consumer model enables it to invest more in product & foster deeper customer relationships.” This brand loyalty, combined with the company’s continued expansion efforts in various global markets, could provide the kind of growth other retailers may struggle to achieve in the coming years.

Lululemon’s growth trajectory has been impressive since its inception. Of course, trees don’t grow to the sky. Investors looking out five or 10 years from now may rightly adjust their growth rates lower.

But given the growth catalysts outlined in this analyst note, in combination with the company’s historical performance, there’s a lot to like about the outlook for LULU stock today.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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