Lululemon IPO Blasts Off

Yoga retailer Lululemon athletica Inc. (LULU) was up more than 50% and climbing on its first day as a publicly traded company, as investors clamored in droves to get a piece of the action.

Lululemon's initial public offering of 18,200,000 shares of common stock was priced at US$18.00 per share and investors on both the Nasdaq and Toronto exchange drove the stock up to US$27.65 and $29.13 as of 11:15 a.m ET Friday (Monday the stock traded after hours at $30.47).

Somewhat surprising is the interest down south in the Canadian-based company which so far seems to be exceeding interest here in Canada. Volumes on the Nasdaq are well above 9 million trades and rising rapidly, while Toronto's trade volume sits currently at around 500,000. Some analysts don't expect the upward trend to continue, however. RBC Capital's Howard Tubin initiated coverage on Friday morning with an "outperform" rating and US$23 price target.

"Our estimates, which we believe are conservative, imply sales growth of 30-44% annually through 2009 and 41-52% growth in EPS over the same time horizon," he said in a research note.

Meanwhile, Mark Rosen, an analyst at Accountability Research Corp, thinks Lululemon's share price will eventually drop below the IPO price, initiating coverage with a C$15.85 target price.