DA Davidson Raises Price Target on Lululemon Athletica (LULU), Raising Valuation on High-Growth Consumer Names

DA Davidson is maintaining its Neutral rating on shares of Lululemon Athletica Inc. (NASDAQ: LULU) as it raises its price target from $100 to $122.

The firm notes that in recent weeks high-growth consumer names have outperformed the market leaving many analysts’ price targets short of current share prices.

An analyst at DA Davidson comments, "We noted six analysts with Buy ratings on LULU and price targets below the current share price on FactSet (NYSE: FDS). In the last two weeks, the median 2012 EV/EBITDA and P/E multiples for our high-growth consumer peer group have expanded from 16.4x and 32.6x to 17.7x and 38.9x. Over this timeframe the median share appreciation in these names has been 11%"

Given strong investor appetite for growth stories within consumer companies, the firm is adjusting the valuation it uses so that its price target will align with current market conditions. Its new $122 price target is based off of a 45x of its 2012 EPS estimate of $2.71 or 37x its 2012 estimate of $3.30.

For more ratings news on Lululemon Athletica Inc. click here and for the rating history of Lululemon Athletica Inc. click here.

Shares of Lululemon Athletica Inc. closed at $120.25 yesterday.

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