Baird has maintained its Outperform rating on Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU), with a consistent price target of $350.00.
The investment firm's confidence in the athletic apparel company remains buoyed by Lululemon's effective localization of its international strategy, particularly in Mainland China.
The strategy was showcased during a recent two-day analyst event in Shanghai, which provided insights into the company's international expansion plans.
The analyst from Baird highlighted Lululemon's success in executing a "localized" international approach over the past few years, which reinforces their belief in the company's potential for continued growth.
They cited a high single-digit percentage growth rate as attainable even with the current slower growth in the U.S. market. The firm anticipates that any significant change in the trajectory of U.S. growth is unlikely to occur until spring 2025.
Despite the near-term outlook for U.S. growth, Baird sees positive indicators for Lululemon's stock. The analyst pointed out that near-term cost efficiencies and upcoming merchandising adjustments could enhance the company's financial performance. Additionally, the current valuation of Lululemon's shares was noted as being at a significant discount compared to historical levels, which may present an attractive risk/reward scenario for long-term investors.
In summary, Baird's analysis suggests that while immediate growth in the U.S. market may be subdued, Lululemon's international strategy, particularly in Mainland China, along with cost efficiencies and merchandising changes, provide a solid foundation for future growth and investment opportunity.
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