Shares of Lululemon Athletica jumped more than 10 per cent to a near two-year high on Monday thanks to the Canadian sportswear maker’s inclusion in Wall Street’s benchmark S&P 500 index.

Lululemon will replace Activision Blizzard in the S&P 500 index before the market opens on 18 October after Microsoft completed its $69 billion acquisition of the video game publisher, S&P Dow Jones Indices said in a statement on Friday.

A company’s inclusion in the S&P 500 index usually triggers a surge in demand for its shares as mutual fund managers and other institutional investors who track the index begin adding the stock to their portfolios.

Lululemon shares rose to $416.01 on Monday, the highest since December 2021. The stock is up nearly 30 per cent over the past year, bringing the company’s market capitalisation to more than $52 billion.

In September, Lululemon struck a deal with Peloton Interactive to become the primary sportswear manufacturer for the US fitness bike maker. In return, Peloton will become the exclusive digital fitness content provider for the apparel maker and will develop all content for Lululemon Studio from early 2024.

In August, Lululemon raised its full-year earnings and revenue guidance for the third quarter for the second time, citing improvements in its North American business.

The stock trades at about 28 times projected earnings for the next 12 months, compared with a five-year historical average of about 40 times, according to LSEG.

According to LSEG, among 32 analysts covering Lululemon stock, the median target price is $450 and the current recommendation is “buy.”