Key Takeaways:
- Lululemon is executing a comprehensive strategy focused on product innovation while expanding global reach across its premium athletic apparel customer base.
- LULU stock could reasonably reach $255/share by the end of 2027, based on our valuation assumptions.
- This implies a total return of 29% from today’s price of $198/share, with an annualized return of 11% over the next 2.4 years.
Lululemon (LULU) is establishing new benchmarks in the global premium athletic apparel industry through strategic focus on high-performance innovation while expanding monetization across its engaged lifestyle and fitness customer base worldwide.
Lululemon combines its core technical apparel expertise with expanding lifestyle offerings to capture the evolving preferences of health-conscious consumers seeking premium athletic wear that transitions seamlessly between workout and everyday activities.
LULU stock benefits from solid momentum, delivering $2.4 billion in fiscal Q1 revenue, representing 7% year-over-year growth and achieving strong earnings per share of $2.60, ahead of expectations, with robust gross margin expansion of 60 basis points to 58.3%.
Lululemon has showcased solid execution across all segments with strong international performance, including 22% constant currency growth in the China Mainland and 17% in the Rest of World, while making progress in the challenging U.S. market with a 2% improvement in revenue growth.
Lululemon’s strategic transformation under CEO Calvin McDonald focuses on delivering high-performance technical solutions that provide long-term customer value while building sustainable global expansion across direct-to-consumer and retail channels for its increasingly international customer base.
Here’s why LULU stock could deliver solid returns through 2028 as it captures global premium athletic apparel opportunities while scaling innovation and international presence.
See analysts’ full growth forecasts and estimates for Lululemon (It’s free) >>>
What the Model Says for LULU Stock
We analyzed the upside potential for LULU stock using valuation assumptions based on its premium brand positioning and expanding global market opportunity across athletic apparel and lifestyle segments.
Analysts see significant opportunity ahead for Lululemon given its unique product innovation capabilities, successful international expansion strategy, and systematic approach to building sustainable customer relationships while maintaining industry-leading margins and brand premium.
Lululemon’s diversified global strategy provides multiple growth vectors while its innovation focus validates that strong execution can drive market differentiation and customer loyalty creation in the competitive athletic apparel landscape.
Based on estimates of 6.2% annual revenue growth, 21.3% operating margins, and a normalized P/E valuation multiple of 14.0x, the model projects LULU stock could rise from $198/share to $255/share.
That would be a 29% total return, or an 11% annualized return over the next 2.4 years.
Value Lululemon with TIKR’s Valuation Model today for FREE (Find undervalued stocks fast) >>>
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for LULU stock:
1. Revenue Growth: 6.2%
Lululemon delivered a solid Q1 performance with revenue rising 7% year-over-year despite challenging U.S. consumer conditions, while achieving strong margin expansion and maintaining full-year revenue guidance of $11.15-11.3 billion, representing 7-8% growth.
Growth was driven by strong international performance with China Mainland up 22% constant currency and Rest of World up 17%, successful product innovation including Align No Line and new lifestyle offerings, and continued market share gains in premium activewear despite macro headwinds.
LULU expects momentum from product innovation pipeline, continued international expansion with 40-45 net new stores planned for 2025, and enhanced brand awareness initiatives while navigating temporary tariff impacts and U.S. consumer caution.
We used a 6.2% forecast reflecting Lululemon’s proven ability to maintain premium positioning and international growth momentum while building sustainable competitive advantages through innovation and global expansion.
2. Operating Margins: 21%
Lululemon achieved strong gross margin performance with a 60 basis point expansion to 58.3% in Q1, demonstrating a successful balance between profitability and strategic investments in innovation, international expansion, and brand building initiatives.
Focus on operational efficiency through premium positioning and global scale supports margin maintenance while funding product development, international market entry, and supply chain optimization despite temporary tariff pressures.
Management targets sustainable long-term margin performance while investing in strategic growth areas, reflecting disciplined capital allocation balancing profitability with market leadership and competitive positioning in premium athletic apparel.
3. Exit P/E Multiple: 14x
LULU stock trades at reasonable multiples reflecting the company’s premium market position and expanding addressable market opportunity across global athletic apparel and lifestyle segments.
We maintain conservative valuation levels given Lululemon’s brand advantages, proven execution in product innovation and international expansion, and systematic approach to building sustainable competitive advantages through technical expertise and customer community development.
Long-term competitive advantages from premium brand positioning, global market opportunities, and operational scale should support reasonable valuations as execution demonstrates sustained profitability growth and market leadership across athletic lifestyle trends.
Build your own Valuation Model to value any stock (It’s free!) >>>
What Happens If Things Go Better or Worse?
Different scenarios for Lululemon stock through 2031 show varied outcomes based on execution and global athletic apparel market expansion success: (these are estimates, not guaranteed returns):
- Low Case: Slower international expansion and prolonged U.S. headwinds → 2% annual returns
- Mid Case: Successful innovation strategy and global growth → 8% annual returns
- High Case: Strong growth across all segments and market leadership → 13% annual returns
LULU stock offers modest returns in the conservative case supported by the company’s unique premium positioning and proven ability to maintain customer loyalty and pricing power in its specialized athletic apparel market.
The upside scenario for LULU stock could deliver solid performance if Lululemon successfully captures expanded international opportunities and maintains market leadership through continued product innovation and global expansion across its premium athletic lifestyle platform.
See analysts’ growth forecasts and price targets for any stock (It’s free!) >>>
Wall Street Analysts Are Bullish on These 5 Undervalued Compounders With Market-Beating Potential
TIKR just released a new free report on 5 compounders that appear undervalued, have beaten the market in the past, and could continue to outperform on a 1-5 year timeline based on analysts’ estimates.
Inside, you’ll get a breakdown of 5 high-quality businesses with:
- Strong revenue growth and durable competitive advantages
- Attractive valuations based on forward earnings and expected earnings growth
- Long-term upside potential backed by analyst forecasts and TIKR’s valuation models
These are the kinds of stocks that can deliver massive long-term returns, especially if you catch them while they’re still trading at a discount.
Whether you’re a long-term investor or just looking for great businesses trading below fair value, this report will help you zero in on high-upside opportunities.
Click here to sign up for TIKR and get our full report on 5 undervalued compounders completely free.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
