Stifel reiterates Buy rating on Lululemon stock, sees innovation driving growth

Investing.com - Stifel maintained its Buy rating on Lululemon Athletica Inc. (NASDAQ:LULU) with a price target of $324.00 on Thursday. The stock, currently trading near its 52-week low of $219.97, has seen a significant 39.49% decline over the past six months. According to InvestingPro analysis, the company appears undervalued at current levels.

The research firm highlighted the athletic apparel retailer’s scaling innovation cycle, which it believes has the capacity to return the core U.S. women’s business to positive growth, potentially reinvigorating confidence in the company’s multi-year outlook.

Stifel described Lululemon as a "best-in-class apparel operator" with capacity for sustainable low-double-digit percentage earnings growth, driven by global expansion and its profitable business model.

The firm identified the third quarter of fiscal year 2025 as a potential catalyst, suggesting that product newness could "move the needle" for the company’s performance.

Lululemon continues to focus on innovation in its product lineup as it competes in the premium athletic apparel market against rivals like Nike (NYSE:NKE) and Under Armour (NYSE:UA).

In other recent news, Lululemon Athletica Inc. has filed a lawsuit against Costco Wholesale Corporation (NASDAQ:COST), alleging that Costco is selling unauthorized copies of its popular products under the Kirkland brand. This legal action seeks to stop Costco’s sales of these items, obtain monetary damages, and secure acknowledgment of misleading customers. Meanwhile, TD Cowen has maintained its buy rating for Lululemon, despite various market challenges, citing confidence in the company’s product innovation and inventory strategy. In contrast, Morgan Stanley (NYSE:MS) downgraded Lululemon’s stock from Overweight to Equalweight due to concerns about the company’s performance in the Americas. Additionally, Lululemon is undergoing organizational changes, cutting approximately 150 corporate jobs to enhance agility and support growth. Bernstein SocGen Group analysts have reiterated their Outperform rating on Lululemon, maintaining a price target of $350, while expressing concerns about U.S. growth prospects. However, they remain optimistic about the company’s long-term strategy, particularly its growth potential in China. These developments reflect a complex landscape of legal challenges, market evaluations, and strategic adjustments for Lululemon.

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