Blackmont Upgrades Lululemon

When Lululemon Athletica Inc. (LULU) left its seawood troubles behind last week and reported stronger-than-expected third quarter earnings results, Blackmont analyst Barbara Gray figured it was time to buy back into the yoga retailer. So, on Monday she upgraded her "hold" rating on the stock to a "buy," and raised her target price from C$41.50 to C$47.00.

Ms. Gray told clients in a note that her upgrade was due to an increase in her discounted cash flow valuation, resulting from the company's higher-than-expected 28% same-store-sales growth during the third quarter, and a future reduction expected in the company's tax rate.

The analyst also said she feels more confident in the Lululemon's growth outlook now that concerns over inventory shortages and new store opening delays in the second quarter have been resolved.