Lulu Lemon Or Next Nike, The Target Price Is $250.

December 4th, the US analysis agency Cowen & Co. pointed out that in recent years, the sports brand, Lululemon, now appears to be more and more like Nike. The company raised its target price to $250 on Tuesday.

The company said Nike's valuation provided a map for the future of Lulu lemon. When Nike's (rising) multiple was applied to the financial indicators and growth opportunities of Lulu lemon, we would find that the latter had a road leading to the $40 billion valuation, the $more than 300 share price and the annual free cash flow of $1 billion.

At the close, Lulu lemon shares fell 1.04%, temporarily reported $223.19, corresponding to the market value of $30 billion 595 million, while Nike's current market value of $142 billion 600 million.

"Assuming Lulu lemon can maintain Nike free cash flow multiplier, we think it will have a road to the market value of US $40 billion. We think Lulu lemons are most similar to Nike in terms of growth, persistence and return on capital. In a report sent to customers on Tuesday, Cowen & Co. analyst, led by John Konan (John Kernan) wrote.

Cowen & Co. currently gives Lulu lemons a "win over the market" rating, which represents a 11% increase in the price of the current transaction based on the target price of US $250.

Cowen & Co. said that the growing menswear and international departments of the company will promote sales, but also pointed out that its consumers "highly loyal to brand owners". In addition, Lulu lemon's new Lab inspired by street style should also attract new customers, and the new footwear series represents more opportunities for the brand expansion.

"We are confident that Lulu lemon's new products, integrated marketing, online momentum, consumer loyalty, healthy high-end customer groups, and sports and leisure fashion trends will bring traffic to Lulu lemon and increase consumption conversion rate." Conan said.

Lulu lemon's early location was only niche yoga clothing, then gradually became the mainstream sports fashion brand, also raised the global sports brand sports leisure trend. The well-known brand of yoga clothing products has grown rapidly since 2018. Although it has a gap with the industry giants Nike and Adi, it has become the third place in the field of sports shoes and clothing, and its market value has already exceeded the professional sports brand Andrea.

Lulu lemon announced its second quarter results in September, showing that its net sales increased 22% to 880 million US dollars from US $720 million a year ago, and gross profit was US $485 million 800 thousand, up 23% over the same period last year, which exceeded analysts' expectations. Subsequently, the company also raised its annual performance guidelines based on men's clothing and online sales. It is expected that the company will announce its third quarter results in December 11th.

The company CEO Calvin Macdonald (Calvin McDonald) said after the announcement of the earnings report: "we are satisfied with the sustainable development ability of the company's business. Under the impetus of the three growth pillars of product innovation, omni-directional experience and market expansion, the company's performance has been advancing step by step. As Lulu lemon continues to enter the new field, there is a more important "T stage" waiting for us.

At the investor conference in 2019, Lulu lemon announced its growth target in the next five years: annual compound growth rate of more than 10%. By 2023, the male product line and the electricity supplier income have increased by more than 1 times, and the international market revenue has increased by 4 times.

Lulu lemon shares have surged 85% this year. By contrast, the shares of rival Nike and Andemar (Under Armour) rose by only 26% and 4% respectively.