Lululemon Athletica Inc. made headlines on Monday by confirming its entry into the prestigious S&P 500 Index, cementing its outstanding performance in the stock market. This news signifies the company’s seventh consecutive session of gains, underlining its impressive performance throughout the year.
The stock surged by an impressive 10%, marking its largest intraday gain in over four months, following the exciting announcement of Lululemon’s addition to the major equity benchmark on October 18. If this bullish trend continues, it will represent the company’s longest winning streak since June.
Lululemon’s inclusion in the S&P 500 further solidifies what has already been a remarkable year. The company’s stock has experienced a robust 29% increase, outperforming the broader market, which saw a 14% gain in 2023, while the S&P Retail Select Industry Index struggled, down nearly 1% during the same period.
Market analysts are optimistic about this development, with Oppenheimer analyst Brian Nagel stating, «The addition of shares to the major index is expected to stimulate increased interest and buying activity.»
The unwavering purchasing power of affluent consumers for popular apparel brands, such as Lululemon, even in times of economic uncertainty, has been a driving force behind the stock’s ascent. In fact, Lululemon confidently raised its annual sales and profit projections in its August earnings report.
On the whole, Wall Street maintains a positive outlook on the retailer, with 27 analysts recommending a «buy,» six «hold,» and only three «sell» ratings, according to Bloomberg data. However, the average price target for Lululemon stands at approximately $431, suggesting a potential 4% return over the next 12 months.
Some analysts also see Lululemon well-positioned to benefit from the growing adoption of GLP-1 drugs, including Ozempic and Wegovy, for weight loss. Bank of America Corp. analyst Lorraine Hutchinson pointed out that weight loss trends in the broader population could trigger a wardrobe replacement cycle, with brands like Lululemon, Urban Outfitters Inc., and Deckers Outdoor Corp. poised to capitalize on this opportunity.
Lululemon’s entry into the S&P 500 will displace Activision Blizzard Inc., now part of Microsoft Corp, as confirmed by SP Dow Jones Indices.
In a separate development, Hubbell Inc. is set to replace Organon Co. in the S&P 500. This change highlights Hubbell’s alignment with the large-cap market space, with the company’s shares surging by up to 4.5% on Monday and boasting a remarkable 30% gain for the year thus far.
