Shares of Lululemon Athletica Inc. (LULU) may have soared 75% in the last two months but some analyst believe the climb could continue.

Analyst Barbara Gray of Odlum Brown raised her target on the stock to US$28 from US$21, saying there is still significant upside potential on the stock and that the retailer has fared far better than its competitors during a brutal recessionary sales environment in the sector.

Lululemon Athletica Inc. (LULU) have been stretched in both directions over the past two years but now, with the economic recovery in sight, Odlum Brown analyst Barbara Gray says the stock should only go up from here.

Ms. Gray said in a note to clients:

Q2 2009 Earnings Call

September 10, 2009 9:00 am ET

By Jon "DRJ" Najarian

Reports Rising Demand

The gun maker reported first-quarter earnings of $0.16 per share, $0.06 better than the analyst estimate of $0.10. Revenue came in at $102.2 million versus the consensus of $94.07 million. SWHC expects second-quarter sales to be between $103 million and $105 million compared with the consensus forecast of $99.76 million. Shares closed at $5.61 yesterday but are higher by nearly 13 percent to $6.33 in the pre-market on our Heat Seeker tracking system.

Lululemon Athletica (LULU) used to be one of my favorite growth stocks. Unfortunately, the stock only enjoyed a few months of success after its IPO, but the initial returns were tremendous.

On July 30, 2007, the stock was issued for $18 per share in the initial transaction. Shares were hard to get your hands on because the deal was over-subscribed, but my fund managed to call in a few favors and participate in the deal. On the first day of trading, the stock closed at $28 for an initial gain of 55%, and then motored higher over the next 12 weeks to reach an eventual high of 60.70 (good for more than 230% in returns).

Bullish:

Starbucks (SBUX), McDonald's (MCD): "I think that (CEO Howard) Schultz has gotten it together...he's got the gross margins going up, a whole bunch of product offerings. I am a buyer of Starbucks, but I'm not backing away from McDonald's."

Has Lululemon Athletica Inc. (LULU) hit upon the marketing secret for luxury-level profit?

Analyst Barbara Gray at Odlum Brown, who has initiated coverage on the Vancouver retailer’s shares with a Buy rating and a price target of $17, says the yoga apparel company has created a “cultural moat” through its unique marketing program.

Q1 2009 Earnings Call

June 11, 2009 9:00 am ET

Tal Woolley at RBC Capital Markets almost doubled his target price on Lululemon Athletica Inc. (LULU) on Wednesday, even though the retailing analyst anticipates the fitnesswear retailer’s first-quarter earnings to come in at C$0.07, a penny below market consensus.

“While growth is expected to slow in 2009, we believe the company’s long-term growth potential remains significantly better than that of most of the peer group,” he wrote in a note to clients, maintaining his rating of outperform on the stock and raising his price target to C$17 from C$9.

U.S. PRE-MARKET INDICATORS

-Dow Industrial futures down 47 points.

-S&P 500 futures down 6 points.

Research in Motion (RIMM), Nokia (NOK), Palm (PALM)

Bullish Calls:

Lululemon (LULU): "I was shocked that LULU had such a good quarter last week… but then again the expectations had been removed so low, that I shouldn’t have been... I think that it is a great growth story. It has just had a very big move, and I would not buy it until it pulled back at least $1.50."

Lululemon Athletica Inc. (LULU) seems to be weathering the tough retail season, analysts say, and investors seemed to agree, pushing the company’s shares up 9% yesterday to $8.37.

“Lululemon is still exceeding the initial $750 sales per square foot target," Analyst Howard Tubin of RBC Capital Markets wrote in a note to clients, at a time when management is seeing more flexibility on rents.

Q4 2008 Earnings Call

March 26, 2009 4:30 pm ET

A challenging Christmas season and currency fluctuations will take a bite out of Lululemon Athletica Inc. (LULU) in the fourth quarter.

That’s according to analyst Tal Woolley at RBC Capital markets, who maintained his outperform rating and C$9 price target on the retailer’s shares.

It is tempting to take cues from Pershing Square's Bill Ackman, who is doubling down on his investment in mall REIT General Growth Properties (GGP). GGP shares are at $1.31, from a 52-week high in the $40s. The company announced Wednesday it has put another one of its flagship malls on the market. The Providence Place mall in R.I. follows three Las Vegas malls and three shopping complexes in Boston, New York and Baltimore that GGP has offered for sale to shore up its balance sheet.

Under Armour (UA) seems like a good short at these levels. The company specializes in making fantastic athletic wear as well as footwear at rather high price points. Tee shirts run around $25 and turtlenecks for $50.

The company’s CEO, Kevin Plank, was on CNBC Wednesday discussing his company's launch into the running shoe category. This is a category dominated by Nike (NKE) and is bound to be quite competitive and challenging for UA. The pricing of the running shoes, according to Plank, was in the $80-120 price range.

F3Q08 Earnings Call

December 11, 2008 9:00 am ET

A shaky economy and negative currency moves have dampened the forecast on yoga-wear retailer Lululemon Athletica Inc. (LULU), according to RBC Capital Markets.

Analyst Tal Woolley has slashed his price target on the Vancouver-based retailer to $17 from $30 but maintained his "outperform" rating on the shares.