Jefferies reiterates Lululemon stock underperform rating amid NFL deal

Investing.com - Jefferies maintained its Underperform rating and $120.00 price target on Lululemon Athletica Inc. (NASDAQ:LULU) following the company’s partnership with Fanatics to sell NFL apparel. The stock, which has declined over 37% in the past six months according to InvestingPro data, currently trades at a P/E ratio of 12.37.

The research firm characterized the NFL partnership as a sign of "deeper strategic confusion" rather than a sound growth initiative, suggesting the move represents a pattern of pursuing non-core growth opportunities at the expense of brand clarity.

Jefferies expressed concern that this strategy risks eroding Lululemon’s premium market positioning and long-term business stability, describing it as "a Hail Mary from a management team struggling to regain momentum."

The firm pointed to what it sees as a troubling trend of Lululemon expanding into non-core categories, discount channels, and licensing deals instead of focusing on its core strengths, particularly as the company faces weakening demand and intensifying competition.

Jefferies warned investors about potential margin pressure and execution risks, suggesting the business model appears "increasingly reactive rather than visionary" as Lululemon transitions "from disruptor to share donor."

In other recent news, Lululemon Athletica Inc. has entered into a partnership with the National Football League and Fanatics Inc. to produce NFL team-branded merchandise. This collaboration marks Lululemon’s first with the NFL and includes apparel for all 32 teams, featuring hoodies and other core products. Meanwhile, BNP Paribas Exane has upgraded Lululemon’s stock rating from Underperform to Neutral, setting a price target of $146.00. This change follows a significant drop in the company’s shares since a previous downgrade in February 2024. However, Bernstein has downgraded Lululemon to Market Perform, citing concerns over a delayed product renewal strategy now expected in Spring 2026. Despite this, Bernstein maintains an Outperform rating with a $220.00 price target, noting plans for bold product changes in 2026. BTIG has reiterated its Buy rating with a $303.00 price target, highlighting the potential for execution improvements as the firm prepares for investor meetings with Lululemon’s executives. These developments reflect a mix of strategic partnerships and varied analyst opinions on the company’s future performance.

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