The Board of Directors of Canadian athletic apparel retailer Lululemon Athletica (LULU) has approved to increase the company’s current stock repurchase program by $500 million to $641.2 million. Lululemon’s product portfolio includes yoga wear, athletic wear, lifestyle apparel, accessories and personal care products. It has 491 stores across the globe.
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Under the expanded program, Lululemon can repurchase common shares through privately negotiated transactions or in the open market. There is no time limit for the plan and no minimum requirement for the number of shares to be repurchased.
In the second quarter, the company repurchased 500,000 common shares at an average price of $338.41 per share. Lululemon’s shares closed 2.2% down on Monday. The stock, however, gained 0.8% in extended trade to end the day at $395.50. (See Lululemon stock chart on TipRanks)
Last month, UBS analyst Jay Sole maintained a Hold rating on the stock and raised the price target to $430 from $375 (9.5% upside potential).
In a research note to investors, the analyst said, “The company’s 30% five-year CAGR should lead the Softlines industry, but the stock is unlikely to outperform as its 52% earnings multiple already accounts for this growth.”
Overall, the stock has a Strong Buy consensus rating based on 14 Buys and 3 Holds. The average Lululemon Athletica price target of $469 implies 19.5% upside potential. Shares have gained 31.4% over the past six months.
According to TipRanks’ Smart Score rating system, Lululemon scores an 8 out of 10, suggesting that the stock is likely to outperform market averages.
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