Lulu Scores The Prized Conviction Buy (LULU)

Lululemon Athletica Inc. (NASDAQ: LULU) is surging on research news this Wednesday morning.  Shares are up 5.5% at $49.64 on more than 2.5 million shares coming in only the first 70 minutes of trading along with the pre-market trading volume.  Goldman Sachs already had a BUY rating on Lululemon but the raised rating was to the prized Conviction Buy List.  While Thomson Reuters has a consensus price target objective of $55.75, Goldman Sachs’ price target objective is all the way up at $64.00 per share.

This was one of the growth stories of 2010 and for part of 2011, but that was before sales growth backed of from scorching to just hot.  Eventually, all growth stories either slow or they run into valuation concerns.  At least one more firm sees continued growth ahead for this yoga-themed leader that has broadened out into more general exercise apparel themes.

Keep in mind that the $49.64 price generates a market cap of more than $7 billion today even if the 52-week range is $32.65 to $64.49.  In short, Goldman Sachs is looking for Little Lulu to get close to its 52-week and all-time highs again.