Is LULU Stock 'Dead Money'? Jefferies Believes So But Calls CEO Change A 'Big Positive', Recommends Return To Roots

Lululemon Athletica Inc. (LULU)“must return to its roots,” and the company's board of directors needs to find a leader to help the athletic apparel maker achieve this, following the exit of CEO Calvin McDonald, said Jefferies in its latest note.

According to TheFly, Jefferies said that the leadership change is a“big positive” for Lululemon. The firm upgraded the company to 'Hold' from 'Underperform,' while hiking the price target for the LULU stock to $170 from $120, implying a downside of 9% from the stock's closing price as of Thursday.

Lululemon shares were up more than 9% in Friday's pre-market trade. Retail sentiment on Stocktwits around the company trended in the 'extremely bullish' territory.

LULU Stock 'Dead Money'

Jefferies said it expects Lululemon shares to be range-bound, calling the stock“dead money.” However, the firm's analyst believes the leadership change is a catalyst for positive change at Lululemon.

Lululemon CFO Meghan Frank and Chief Commercial Officer Andre Maestrini have been named as the interim co-CEOs while the company looks for McDonald's successor.

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