Goldman Sachs ups its price target on one athleisure stock, giving it over 30% upside

Published Mon, Dec 12 202211:42 PM EST

Goldman Sachs has upped its price target on athleisure retailer Lululemon , describing it as a "best-in-class market share gainer." The bank reiterated its buy rating on the stock in a note Friday and raised its 12-month price target to $431 from $383 prior. That represents over 32% upside to the stock's closing price of $326.39 Friday. Goldman analyst Brooke Roach described Lululemon, known for its trendy but pricey workout apparel and loungewear, as a "structural share gainer with ongoing broad-based momentum and several levers for long-term growth." "We continue to believe Lululemon's innovation engine is best-in-class, leading us to believe that Lululemon will continue to demonstrate above-trend growth," she wrote. "We believe Lululemon is well-positioned given limited reliance on promotions and strong pricing power. We also note that in the face of a challenging and volatile macro, Lululemon continues to demonstrate strong execution despite tough compares." She added that the company will benefit from "cost tailwinds" in 2023, which would help deliver "solid" earnings per share growth. However, the stock is no longer on Goldman's conviction list — the crème de la crème of the bank's universe of buy-rated stock picks. Lululemon's removal from the list came as the sportswear maker beat analysts' estimates on revenue and earnings for the third quarter, but offered softer-than-expected guidance for the holiday season. "While we remain constructive on Lululemon's growth prospects and market share winner status, we acknowledge that the business has been a notable comp outperformer in 2022 on the back of what we see as a record year of innovation and traffic-driving products," Roach added. "As we look into 2023, we believe accelerated growth and outperformance versus the sector may be modestly harder to achieve." The stock remains a favorite among Wall Street analysts, with 67% of analysts covering it giving it a buy rating and average potential upside of 22.6%, according to FactSet data. — CNBC's Michael Bloom and Melissa Repko contributed to reporting