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On Friday, Jefferies analysts reduced the price target for Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU) stock to $200 from $220, while maintaining an Underperform rating. The decision follows Lululemon’s mixed first-quarter results, which showed a modest 3% revenue growth in the Americas and a 2% year-over-year decline in comparable sales. According to InvestingPro data, analyst targets for LULU currently range from $194 to $500, with the company maintaining impressive gross margins of 59.22% despite market challenges.
Jefferies analysts expressed concerns over the weak trends in the United States, highlighting the challenges posed by slowing mall traffic. The analysts noted that relying on growth in China has not been effective, and macroeconomic uncertainties continue to pose risks for the company. However, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.16 and overall revenue growth of 10.07% in the last twelve months. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial analysis through the Pro Research Report.
The report also pointed out rising inventory levels and increased selling, general, and administrative (SG&A) costs as potential threats to Lululemon’s earnings per share growth in 2025. The analysts advised investors to consider selling shares, reiterating their Underperform rating on the stock.
Jefferies’ assessment reflects ongoing challenges for Lululemon in maintaining momentum in key markets, as external factors and internal cost pressures weigh on the company’s financial outlook. Investors are advised to monitor these developments closely in the coming quarters.
In other recent news, Lululemon Athletica Inc. reported its first-quarter performance, surpassing sales and earnings per share (EPS) expectations by narrow margins. Despite this, the company adjusted its EPS forecast downward due to tariff impacts and consumer caution, although it maintained its annual sales guidance. Analysts from Piper Sandler and Goldman Sachs have lowered their price targets for Lululemon to $270 and $285, respectively, citing concerns over sales trends and international performance, particularly in China. TD Cowen, however, raised its price target to $373, expressing confidence in the company’s earnings potential and strategic pricing adjustments.
Lululemon’s management has indicated plans to increase prices on a small portion of its product line to mitigate tariff impacts, a move that has raised questions about the brand’s maturity in the U.S. market. Raymond (NSE:RYMD) James analysts maintained a Market Perform rating, noting macroeconomic uncertainties and tariff pressures as key considerations for potential revenue growth. They project a 7% revenue increase for the first quarter, aligning closely with consensus estimates.
Looking ahead, there is potential for momentum in the second half of the year as new products, such as the Align (NASDAQ:ALGN) No Line franchise, gain traction. Piper Sandler analysts also noted steady U.S. trends, with new product lines like Daydrift and Glow Up performing well. As Lululemon continues to navigate these challenges, analysts remain focused on the company’s ability to manage tariff impacts and maintain its growth trajectory in key markets.
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