Lululemon shares jump on upgrade to 'Outperform'
Lululemon Athletica Inc. shares jumped in trading Friday after an RBC Capital Markets analyst upgraded his rating on the yoga clothing maker.
Analyst Howard Tubin said in a research note that while Lululemon hit some speed bumps in 2013, he believes the bulk of its bad news has passed. Tubin said that Lululemon has a new senior leadership team and strong brand that should help propel it forward. And given a drop in its stock price from recent highs, Tubin sees a good entry point to buy shares.
The analyst upgraded his rating on the company's stock "Outperform" from "Sector Perform."
Lululemon, based in Canada, has dealt with a series of setbacks recently.
The company pulled a line of its popular yoga pants from shelves last year after customers complained they were too sheer, which the company blamed on production issues. Then several top leaders left Lululemon, including its popular CEO Christine Day. Its founder Chip Wilson, who angered some people with his comments that suggested larger women's bodies were to blame for some quality complaints, later stepped down. Lululemon has acknowledged that some of its issues have weighed on its performance.
Lululemon's shares closed at a 52-week high of $82.28 in June but closed Thursday at $45.45, a nearly 45 percent decline. The upgrade on Friday cheered some investors, who sent shares up $1.96, or 4.3 percent, to $47.41 by early afternoon.