Truist Securities analyst Joseph Civello initiated coverage on Lululemon Athletica Inc.
According to the analyst, Lululemon has some of the strongest brand loyalty in the activewear industry as its direct-to-consumer (DTC) model enables it to invest more in products & foster deeper customer relationships.
The analyst writes that even in today's macro-pressured/promotional environment, LULU's demand/full-price selling remains robust.
Civello sees ample growth opportunities as it rapidly expands in key areas (men's, digital, & international).
From high-tech fabrics that offer the best fit/feel to its fashion-forward designs, customers have shown they're willing to pay a premium for LULU products, per the analyst.
Further, despite leading earnings visibility, LULU's premium to peers/the market remains at/below historical levels, which creates an attractive entry-point for a best-of-breed name, the analyst adds.
The analyst forecasts a 15% revenue CAGR from 2022-2025E.
Further, given LULU's solid cost controls, the analyst forecasts strong visibility into forward earnings growth and projects a 17% EPS CAGR to $16.15 by FY25.
Further, on an EV/EBITDA basis, the analyst notes that LULU's premium to its athletic peers is mainly in line with historical levels (63% vs 58%). The analyst projects an EPS of $12.15 for FY23 and $14.15 for FY24.
Price Action: LULU shares are trading higher by 0.95% to $424.26 on the last check Friday.
