It's no secret that Lululemon (LULU) has been one stock that everyone–from consumers to that investors–really loves to hate. Or at least that’s what we thought.
Christian Science Monitor/Getty But yesterday, Citigroup’s Oliver Chen issued a positive note on Lululemon, and today RBC analyst Howard Tubin stepped off the sidelines and upgraded the battered company to Outperform from Sector Perform. Citing the company's new leadership, strong brand and the current cheap look of the stock, Tubin sees serious upside. He writes:
We believe lululemon represents a unique and compelling growth story in the apparel retail space. With most of the bad news from 2013 now in the rear view mirror and the shares meaningfully of their highs, we believe the entry point is compelling. Applying a 24-26 times multiple (a premium to the high-growth/niche softlines peer group based on better than average long-term growth prospects) to our 2014 estimate of $2.15 yields our price target of $56.
Whether or not it's truly time for investors to get in where they fit in (bad pun completely intended) remains to be seen, but we just ran a quick check of Lululemon’s stock and it is up 4.6% to $47.53 today at 3:50 p.m.m while Under Armour (UA) has risen 2.8% to $109.14, Nike (NKE) has advanced 1.6% to $72.64 and the Gap (GPS), which bested earnings forecasts today, is up 5.9% to $42.04.
Still, Luluemon has a long way to go. Even after today’s gain it’s still down 20% this year alone.
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