Lululemon stock jumps after earnings. Why analysts are optimistic.

Lululemon (LULU) shares jumped on Friday, a day after the activewear company beat third-quarter profit estimates and analysts expressed bullish price targets.

Morgan Stanley said the company’s results and improved full-year guidance “left little reason for the bears as U.S. growth stabilized (and) women and China accelerated.” The company reiterated its “overweight” rating and increased his price target to $414.

Lululemon raised its full-year revenue forecast to $10.452 billion to $10.487 billion, up from the previous range of $10.375 billion to $10.475 billion.

Analysts call Lululemon “uniquely positioned” for growth

Stifel analysts raised their price target to $438 from $370 and maintained their “Buy” rating. That represents a premium of about 7% after Lululemon shares rose 18% on Friday to hit an intraday high of about $408.

“We see LULU in a unique position at the intersection of long-term trends and believe its international growth contribution is being underestimated,” Stifel analysts said in a report on Thursday. The company is expected to “sustain strong growth” by adding new customers and increasing revenue per customer.

Analysts’ optimism comes after Chief Executive Officer (CEO) Calvin McDonald recognized the company’s “newness problem” last quarter, as fewer seasonally updated products resulted in lower conversion rates.

Lululemon shares were last up about 16% at $401.52 late Friday afternoon, but have lost more than a fifth of their value in 2024.