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Investing.com - TD Cowen has lowered its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $220 from $298 while maintaining a Buy rating on the athletic apparel retailer’s stock. The stock, currently trading at $206.09, appears undervalued according to InvestingPro analysis, despite falling 41% over the past six months.
The firm’s adjustment comes after discovering that 66% of Lululemon’s U.S. e-commerce orders are fulfilled through Canada, taking advantage of the de minimis loophole that the Trump administration recently eliminated.
TD Cowen notes this percentage is "far higher" than anticipated and provided Lululemon with a significant financial benefit—approximately 250 basis points of "unsustainable annual benefit to gross margin."
The research firm indicates that while Lululemon maintains "ample distribution center and ship from store capacity" in the United States, the company had clear financial incentives to fulfill orders from Canada under the previous rules.
TD Cowen has revised its earnings per share forecast for Lululemon’s fiscal year 2026 downward to $12.79 from its previous estimate of $15.21, representing a year-over-year decline in earnings.
In other recent news, Lululemon Athletica Inc. reported second-quarter earnings per share of $3.10, surpassing analyst expectations of $2.87, with revenue growing 7% year-over-year. However, same-store sales increased by only 1% on a constant currency basis, falling short of the projected 2.4%. Several investment firms have responded to these results by adjusting their outlooks. JPMorgan lowered its price target to $191, citing a weak outlook, while Wells Fargo reduced its target to $160, describing the performance as a "clear negative standout." BTIG also adjusted its price target to $303, attributing the change to U.S. sales weakness. Telsey Advisory Group downgraded Lululemon from Outperform to Market Perform, reducing its price target to $200 due to sales misses and tariff challenges. UBS set its price target at $185, noting the need for Lululemon to revamp its operating model to restore growth. These recent developments reflect analysts’ cautious stance on Lululemon’s future performance.
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