A Piper Sandler & Co. analyst upgraded lululemon athletica Inc. stock, citing opportunity for “outperformance in outerwear this Fall/Winter, and stable promotional intensity.”

In a note released Tuesday, Abbie Zvejnieks, research analyst at Piper Sandler, raised her rating for the Vancouver-based company to overweight (the equivalent of a buy), from neutral. She also increased her price target to US$350, from US$320.

Zvejnieks thinks lululemon’s outerwear division will outperform this year, with colder weather expected to hit North America in the fall and winter.

She said this could represent an estimated 240 basis points of revenue growth in the third quarter.

Zvejnieks added that lululemon will not have to “react as much as peers to the more intense promotional environment.”

According to the fall 2022 Piper Sandler Taking Stock with Teens Survey, teens’ favourite clothing brand is Nike, Inc. (15 per cent), followed by lululemon (11 per cent) and American Eagle Outfitters, Inc. (nine per cent.)

“We do not think LULU (lululemon) will have to react to NKE's (Nike) increased promotional activity as much as peers due to the stronger brand positioning and more affluent customer base. Additionally, app download data and Google Trends remain solid,” Zvejnieks said.

Methodology for Piper Sandler Taking Stock with Teens Survey:

“The Piper Sandler Taking Stock With Teens® survey is a semi-annual research project that gathers input from 14,500 teens with an average age of 15.8 years. Discretionary spending patterns, fashion trends, technology, and brand and media preferences are assessed through surveying a geographically diverse subset of high schools across the U.S. Since the project began in 2001, Piper Sandler has surveyed more than 233,400 teens and collected over 56.5 million data points on teen spending.”