Analyst: Lululemon (LULU) Headed to $85

Women’s athletic-wear maker Lululemon (Nasdaq: LULU) has been a solid growth stock of late. A new analyst report asserts that the stock isn’t done growing.
Sterne Agee released a report today setting a price target of $85 a share for Lululemon. The stock is currently trading at $73.28 a share, not far off its 52-week high of $77.13.
The new price target stems from the recent analyst day Lululemon hosted. There the company revealed its plan to triple its number of U.S. stores within the next five years and increase its international presence over the next two years. Lululemon currently operates 100 U.S. stores, plus another 42 in Canada and 19 in Australia.
And while the company is primarily geared toward females, sales of its men’s offerings (which comprise 12% of the company’s total sales) have been growing steadily.
Lululemon also highlighted its improved speed. Products now go from inception to retail in nine months, whereas other active-wear companies take about twice as long.
Those factors, along with the company’s purported commitment to “building relationships” with customers and vendors alike, was enough to convince Sterne Agee that Lululemon’s stock is well positioned for 16% growth despite being near its 52-week high.
Lululemon has certainly behaved like a growth stock in 2012. It started the year at $46.66 a share and has since risen a remarkable 58.7% in three and a half months. Considering its 2011 profits grew by 50%, it’s no wonder.
Now, it seems, there are reasons to suspect that Lululemon has plenty more room to grow.