Since lululemon athletica (LULU) reported better than expected third quarter results last night, Wall Street analysts have issued widely varied takes on the company. Oppenheimer and Wedbush remained bullish on lululemon, raising their price targets on the shares, but Canaccord reiterated a Sell rating on the stock. Meanwhile, Evercore ISI upgraded lululemon two notches to Buy from Sell.

Results

Yesterday, lululemon reported third quarter earnings per share of 47 cents and revenue of $544.4M, both above consensus of 43 cents and $539.95M. The company also said that total comparable sales increased by 7%. Additionally, lululemon revised its 2016 normalized earnings per share view to $2.11-$2.16 from $2.07-$2.15, and its revenue forecast to $2.32B-$2.34B from $2.325B-$2.35B.

For the fourth quarter, the company expects earnings per share of 96c-$1.01 and revenue of $765M-$785M, with consensus at $1.01 and $786.75M, respectively.

Results to silence 'skeptics'

In a post-earnings note, Oppenheimer analyst Anna Andreeva raised her price target for lululemon to $75 from $70, saying the company is still one of a rare breed of 13%-15% top-line growth stories in consumer, with bottom-line inflection finally following, despite the athletic landscape losing some steam. She reiterated an Outperform rating on the shares.

Her peer at Wedbush also remained bullish on the stock, saying the results should silence skeptics. Analyst Morry Brown raised his price target for lululemon to $81 from $70, noting that "strong" third quarter results and commentary suggest higher earnings power in 2017 and 2018. Further, the analyst pointed out that same-store sales trends and pricing power clearly remain on strong footing, gross margins gains appear more significant than expected through the first half of 2017, and SG&A is now expected to leverage in 2017. He reiterated an Outperform rating on the shares.

Canaccord still bearish 

In a note of his own, Canaccord analyst Camilo Lyon noted that lululemon's results did "little to alleviate his concerns" for 2017. The analyst said comparable sales growth was driven by conversion gains, while traffic was still negative, and pointed out he believes gross margins will continue to trend lower as comps moderate. Furthermore, while the athleisure trend decelerates and technical denim gains momentum, Lyon expects the company to have a hard time maintaining its mid-single digit comp trajectory. The analyst reiterated a Sell rating on the shares.

While reiterating a Hold rating on the stock, Jefferies analyst Randal Konik said he still sees risk to top-line and gross margin when looking beyond 2017. The analyst told investors that he remains wary of decelerating momentum in athleisure exacerbated by the rise in denim.

Pricing power 

Meanwhile, Evercore ISI analyst Omar Saad double upgraded lululemon to Buy from Sell and raised his price target for the shares to $80 from $50, following the retailer's "impressive" results. The analyst acknowledged that he did not fully appreciate the extent of the brand's "untapped pricing power" and how underutilized this power had been until recently. Having seen this phenomenon play out for other athletic brands over the years, Saad said he appreciates "the powerful impact a technically-led price-mix shift" can have on the sustainability of sales growth and margin expansion, especially in today's low-traffic environment.

Price action

In morning trading, shares of lululemon have jumped over 16.5% to $69.77. 09 Jan LULU lululemon $59.84 2.6 (4.54%)