LULU
Lululemon Athletica Inc.
$127.18
Platform & Compounding FCF
85%
Two-stage FCF DCF
Mild
·
Conviction
Fair Value
Trading 13.8% below fair value
You pay
$127.18
Bear
$123.13
Fair
$147.56
Bull
$169.27
Bear
$123.13
-3.2%
4% stage 1 growth, 11% discount
Fair
$147.56
+16.0%
6% stage 1 growth, 11% discount
Bull
$169.27
+33.1%
8% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (6% base case)
Terminal Value % of EV
36%
Implied Market Multiple
17.4x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $200.57 from 70 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $147.56 per share.
Warnings
Wall Street's average price target is $200.57 (from 70 analysts). Our estimate is 41% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions