Lululemon upgraded to Strong Buy on solid international growth and strong downside protection despite US softness.

Lululemon athletica has been upgraded to a Strong Buy rating as its current valuation offers a significant discount to its turnaround potential. Despite ongoing weakness in North America and cautious guidance, the company benefits from a debt-free balance sheet and robust share buybacks, which could yield around 8.76%, providing strong downside protection. International markets, particularly China and other global regions, are growing strongly at 23% and 9% year-over-year, offsetting softness in the US. Even with conservative assumptions, Lululemon's intrinsic value is estimated well above current market levels, indicating significant upside potential despite near-term macroeconomic challenges.