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Bernstein analyst Aneesha Sherman upgraded shares of Lululemon (NASDAQ:LULU) to Market Perform from Underperform with a $300.00 per share price target.
The upgrade call comes just two months after Sherman started research coverage on LULU with an Underperform rating.
“While we liked the growth story, we put the stock’s valuation at 30x NTM P/E, in line with other quality consumer names with mid-to-high teens EPS growth (e.g. Nike), versus a bullish 46x sell side average,” Sherman told clients in a note.
The analyst justified the upgrade move by saying “a lot has changed in two months,” namely the sector de-ration. Sherman is calling for a total revenue growth of 16%, which is a point above guidance.
Bernstein remains bullish on consumer stocks despite the move lower as the sector can offer “high-teens earnings growth and high margins carrying 30+ NTM P/E multiples.”
Lulustock is up 1% in pre-open today.
