Lululemon is a brand still on the rise, Citi says in upgrade
Lululemon started the year on a high note, but shares have stumbled in the past few months alongside the broader market. But Citi believes the stock's recent pullback creates an attractive entry point to buy the stock. On Wednesday the firm upgraded the stock to buy, saying the company's fundamentals remain strong and that the stock has been unfairly punished by the broader market decline. "In recent months fears of a macro slowdown have taken the winning brands down with the rest of the group, seemingly painting all with the same brush. LULU has been a victim, yet is a story of improving fundamentals and stand-out growth prospects, and now at a much lower price," analyst Paul Lejuez wrote in a note to clients.

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Shares of Lululemon have soared 56% this year, hitting an all-time intraday high of $164.79 on October 1. But since then the stock has dropped 25%, meaning it is now trading in bear market territory. The company reported third quarter earnings on December 6 that topped analyst estimates for both EPS and revenue. Guidance was light, however, which has put further downward pressure on the stock. Investitute co-founder and Lululemon shareholder Pete Najarian believes the sell-off is overdone. He highlighted strong Q3 same-store sales -- an 18% increase versus 13.8% expected by analysts -- as evidence that the brand remains strong.