Piper Sandler upgraded Lululemon Athletica (NASDAQ: LULU) to an Overweight rating on Tuesday.
The firm pointed to momentum for LULU in its recent survey and sees an opportunity for outperformance in outerwear this fall and winter. Crucially, Lululemon (LULU) is noted to have a stable promotional backdrop.
"In what we view as a tougher and more uncertain consumer environment, we want to point investors to quality. We continue to believe LULU has best-in-class product innovation which should drive demand, and we do not believe LULU will have to react as much as peers to the more intense promotional environment."
Cutting across the cautious vibe in the retail sector, Piper boosted estimates on LULU and established a new price target of $350, which works out to a 31.0X multiple of the FY23E P/E estimate. Piper thinks that multiple for LULU is fair compared to peers given the strong revenue growth.