Investors should buy Lululemon shares because of its growth prospects overseas, according to one Wall Street firm.
Deutsche Bank raised its rating for the apparel retailer's shares to buy from hold, predicting Lululemon will report sales above expectations.
The call sent the stock up 2 percent during Thursday's premarket session.
"Lululemon drives enormously strong customer loyalty, controls its distribution unlike other brands, leads the industry in full price selling, and is still in its infancy growing its International business," analyst Paul Trussell wrote in a note to clients Thursday.
The analyst raised his price target for the company's shares to $89 from $72, representing 20 percent upside from Wednesday's close.
Trussell noted how Lululemon reported strong 7 percent comparable sales growth in the past two quarters. He said the company's Asian stores grew sales nearly 100 percent and European stores grew 40 percent in the third quarter. The analyst cited how only 17 percent of the company's stores are outside North America.
"LULU's international growth pillar continues to reflect one of the company's most significant opportunities," he wrote. "We think LULU will likely beat 4Q expectations on robust SSS [same store sales] and leverage of expenses."
Lululemon stock has underperformed the market year to date with its shares up 14 percent through Wednesday, compared with the S&P 500's 19 percent return.
— CNBC's Michael Bloom contributed to this story.