Lululemon price target raised to ‘street high' $335 at Raymond James

On Friday, Raymond James analysts led by Matthew McClintock kept their ‘strong buy’ rating on shares of Lululemon, but raised their price target on the stock to a street-high of $335. The athletic apparel retailer remains a top idea at the firm, as it sees the current crisis only accelerating Lululemon’s favorable positioning as a leader in the athletic apparel market.

Video Transcript

MYLES UDLAND: All right, welcome back to "The Final Round" here on Yahoo Finance. Myles Udland with you in New York.

And it's time now for our call of the day, and today we're talking about Raymond James's latest note on shares of Lululemon. That stock here is up over 4% in after-- or in afternoon trading. The stock has been on an absolute tear during this time of coronavirus. Raymond James putting a $335 price target on the name.

And, Seana, I think it's-- you know, we've seen Lululemon called out by a number of analysts over the last month, and they all kind of say the same thing, which is just that there are going to be massive, massive winners as a result of this economic dislocation, and they might be winners for different reasons. I think Lulu's comes down to people don't wear hard pants anymore, and people really love the brand. But, I mean, it seems that there was an athleisure category maybe a year or two ago, and now there's like a Lululemon category, and everybody else tries to play in that.

SEANA SMITH: Well, yeah, and I think that's totally right because, Myles, you can just look at the market today and see what's happening. We clearly have retail winners in the market today and losers. For example, Lululemon is up just around 5%. And Nordstrom, which has been on the other side the story-- has been hurt by coronavirus-- is off over 10% after its results last night.

But this note from Raymond James I think really confirmed what a lot of us were thinking, at least when it comes to Lululemon or companies like that, just the fact that more people are buying their type of clothing when they are staying at home. You want to wear comfortable pants every day. You want to wear comfortable shirts, comfortable sweatshirts. So people will be spending their money at places like Lululemon.

And a couple of things stuck out to me in this note just in terms of some of the trends that Raymond James has seen with Lululemon recently. One, it's their loyal customer base. That's something I know you and I have talked about in the past here on Yahoo Finance. And then also just their strong presence for their digital platform and also just their online penetration, their strong position there.

And then also just simply the fact that they're better positioned than most to reduce markdowns going forward, and that's simply because they have better control over their supply chain and their product than some of their competitors. And also simply because their product is less seasonal. People still tend to buy long pants like their Lulu, like their yoga pants or some of their long-sleeve shirts in the summer. So they're not as exposed as some of their competitors out there.

DAN ROBERTS: And, guys, let me chime in here because we've talked about this before, and the narrative hasn't really changed. We were in an athleisure boom. That has been happening within this space for really a couple years.

And the companies that rode it and then the companies that luckily it was built into their DNA have done very well. Lulu, it was built into its DNA. Athleta, which, of course, you know, within the Gap line and one of the few things working there, it was in its DNA. Nike, a little bit it was in its DNA. And then when it saw the writing on the wall and saw the trend, it embraced it more. Adidas embraced it more and luckily had some of it in its DNA because there's also a little bit of connection here to the retro, the throwback, comfort, streetwear, wearing athletic gear and wearing sneakers as everyday.

Under Armour, it was not at all in its DNA, and Under Armour tried to resist it. And, in fact, [INAUDIBLE] Kevin Plank saying on calls it's not about athleisure. It's not about that. It is. It was about athleisure.

And so, of course, this time-- which it's weird to say that it would be, you know, a great thing for anyone, but boy, it seems like this time has been a great thing for Lulu because anyone who wasn't on the athleisure train sure is now. I mean, everyone's wearing it all day. They're wearing sweatpants or shorts. You know, I was wearing sweatpants every single day on TV with a button-down shirt up top. And now that it's getting hot, I've transitioned to shorts, Lululemon men's shorts. That's what I have on. And so of course Lulu's doing well, and of course it seems to me like an easy upgrade.

MYLES UDLAND: All right, there you go, more than you'd ever want to know about Dan Roberts's sartorial choices during this Google Meet-produced show.