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VANCOUVER, Canada — Lululemon Athletica Inc. shares gained as much as 5.4 percent after Morgan Stanley upgraded the stock, predicting that new management will reinvigorate sales growth and bolster profit margins.
Kimberly Greenberger, a Morgan Stanley analyst in New York, raised her rating on Lululemon to “overweight,” the equivalent of a buy, from a neutral recommendation. Improving margins could help the company return to 20 percent growth in earnings per share, she said in a note.
Chief Executive Officer Laurent Potdevin, who took the helm last year, is adding seasonal products that have stylish elements, such as open-backed tops and floral-patterned leggings. That's helping broaden Lululemon's appeal beyond the yoga studio. The retail chain also is opening more international stores and drawing more male customers by adding floor space devoted to men's products.
Lululemon’s stock rose as high as $55.77 in New York on Monday, the biggest intraday gain in more than three weeks. Before the rally, shares of the Vancouver-based company was down 5.2 percent this year.
By Lindsey Rupp; editors: Nick Turner, Kevin Orland.
