Lululemon Stock: Exercise Your Right to Wager on a Winner

Stock Market

Is Lululemon Athletica (NASDAQ:LULU) stock right for you? The answer is that it depends. There’s an elephant in the room that can’t be ignored, as Lululemon’s founder is stirring up controversy in the media. However, investors may choose to overlook this problem because of Lululemon’s impressive revenue growth.

Not everyone will want to invest in Lululemon, and that’s a personal decision. Still, 2024 could shape up to be an amazing year for Lululemon stock. So, let’s dive right in and see why Lululemon is a topic of heated debate now.

What Did Lululemon’s Founder Say?

Lululemon founder and former CEO Chip Wilson recently made remarks that might be considered divisive. Recently, Wilson blasted Lululemon for its emphasis on the “whole diversity and inclusion thing.” Furthermore, he declared, “You’ve got to be clear that you don’t want certain customers coming in.”

Previously, Wilson said about Japanese people attempting to pronounce “Lululemon,” “It’s funny to watch them try and say it.” Wilson also once stated, “They don’t work for some women’s bodies,” referring to certain leggings that Lululemon sold.

Before you short-sell LULU stock out of indignation against Wilson, bear in mind that he’s not directly associated with the company anymore. He stepped down from the CEO position at Lululemon in 2013 and left the company’s board in 2015.

Also, for what it’s worth, Lululemon appears to be distancing itself from Wilson. “Chip Wilson does not speak for Lululemon, and his comments do not reflect our company views or beliefs,” a Lululemon spokesperson assured. On the other hand, it’s not good publicity for Lululemon if Wilson continues to make divisive comments.

Analysts Raise Their Price Targets on LULU Stock

Analysts are undoubtedly aware of Wilson’s controversial remarks, but they’re mainly focused on Lululemon’s growth story as a business. After an impressive rally in 2023, Wall Street’s experts are bracing for another powerful performance with Lululemon stock.

It’s hard to blame analysts for their optimism. Lululemon has an outstanding track record of quarterly EPS beats. Moreover, in the third quarter of fiscal 2023, Lululemon’s revenue increased 19% year over year and the company’s comparable (i.e., same-store) sales grew 13%.

On top of all that, Lululemon earned $2.53 per share in Q3 FY 2023, easily beating the analysts’ consensus estimate of $2.28 per share. In addition, a slew of analyst firms have raised their price targets on LULU stock. Here’s a rundown of some of their Lululemon ratings and price targets:

  • Truist: “Buy,” $555 (previously $527)
  • Baird: “Outperform,” $555 (previously $520)
  • JPMorgan Chase: “Overweight,” $531 (previously $500)
  • Barclays: “Overweight,” $610 (previously $530)

The Barclays analysts even went so far as to proclaim that a 2024 “retail megacycle has arrived.” I’m not quite prepared to declare any “megacycles” so early in the year, but Lululemon’s Q3 FY 2023 revenue growth is indisputable.

Lululemon Stock Could Soar in 2024

Lululemon is distancing itself from its controversial founder. Nevertheless, some investors may not want to get involved with Lululemon stock. I will certainly respect that decision if you choose to make it.

Yet, Lululemon might end up participating in a strong year for retail athletic-wear sales and maybe even a “megacycle.” In other words, LULU stock could perform well in 2024, just like in 2023. So, if you’re willing to accept or overlook the controversy, feel free to consider a share position in Lululemon.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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