By Anuja Bharat Mistry
(Reuters) - Lululemon Athletica (NASDAQ:LULU) shares jumped about 17% in early trading on Friday as an upbeat annual forecast raised investor optimism for a robust holiday quarter and prompted Wall Street to take a more bullish view on the stock.
The athleisure maker has refreshed its clothing line with trendier styles to attract younger shoppers and keep up with stiff competition from newer brands such as Vuori and Alo.
It has also used targeted marketing to drive sales in China, its second-largest market, where its third-quarter revenue surged about 36%.
"Despite competitive threats, Lululemon's customers remain loyal," Raymond (NS:RYMD) James analyst Rick Patel said.
At least 17 brokerages raised their price targets on the stock after the company posted better-than-expected quarterly results on Thursday.
Stifel was the most bullish among the 36 brokerages covering the stock and bumped up its target by $68 to $438, well above Wall Street's median estimate of $374.10. The company's shares were trading at $404.64 and were set for their best day since June 1, 2018, if gains hold.
Lululemon was also upbeat about sales during the crucial Thanksgiving weekend, reflecting the optimism at other specialty retailers, including Victoria's Secret and cosmetics retailer Ulta Beauty (NASDAQ:ULTA).
Victoria's Secret and Ulta Beauty also reported strong results on Thursday, sending their shares up about 7% and 10%, respectively, in regular trading.
Lululemon's forward earnings multiple for the next 12 months, a common benchmark for valuing stocks, was 23.03, compared with Nike (NYSE:NKE)'s 25.91 and Under Armour (NYSE:UA)'s 27.10.
Lululemon shares are down nearly 33% for the year.