By Sam Boughedda
Lululemon Athletica (NASDAQ:LULU) shares were upgraded to Overweight from Neutral, with the price target boosted to $350 from $320 per share by Piper Sandler on Tuesday.
Piper Sandler analysts said in a note to clients that the upgrade is based on momentum in the firm's Spring 2022 TSWT Survey, the opportunity for outperformance in outerwear this Fall/Winter, and stable promotional intensity.
"In what we view as a tougher and more uncertain consumer environment, we want to point investors to quality. We continue to believe LULU has best-in-class product innovation which should drive demand, and we do not believe LULU will have to react as much as peers to the more intense promotional environment," wrote the analysts.
Following its survey, Piper Sandler stated that Lululemon gained "significant mindshare underpinning the aspirational nature of the brand and its ability to attract a new generation of consumers." The company reached the number two favorite apparel brand among teens, with mindshare increasing 171 bps Y/Y and 151 bps sequentially, while the company's rank among males improved to number six from number nine in the Spring.
"Within the UI athletic apparel ranking, LULU continued to be No. 2 overall but moved to the No. 1 spot among UI females, outpacing Nike for the first time. LULU continues to be the No. 1 new brand being worn by female teens, and leggings/lululemon was the No. 1 fashion trend among UI females (ahead of crop tops, jeans, and Nike). In our social media checks, we see customers resonating with new product such as the Scuba Half-Zip, and we think these checks along with the survey results solidify LULU's brand positioning," the analysts added.