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Investing.com - Morgan Stanley has lowered its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $223.00 from $280.00 while maintaining an Equalweight rating on the stock. The move comes as the stock has declined over 44% in the past six months, though InvestingPro data suggests the company remains undervalued at current levels.
The firm cited continued concerns about the lack of a positive Americas comparable sales inflection, which it believes is unlikely to materialize in the second quarter of fiscal 2025.
Morgan Stanley also indicated that Lululemon’s fiscal year profitability guidance likely needs to be reduced, despite the company’s best-in-class margin profile and potential for above-peer growth in some areas.
The investment bank noted that Lululemon’s current valuation of approximately 14x forward price-to-earnings ratio appears "overly punitive," but suggested that re-rating is unlikely without improvement in Americas sales performance.
Despite these concerns, Morgan Stanley maintained that the risk-reward for Lululemon still skews to the upside over the next twelve months, based on the stock’s current valuation and potential for improvement in Americas sales trends.
In other recent news, Lululemon Athletica reported a 7% increase in total revenue for the first quarter of 2025, reaching 2.4 billion dollars. Despite facing tariff challenges, the company’s net income rose to 315 million dollars, translating to 2.60 dollars per diluted share. These financial results underscore Lululemon’s steady growth amid external pressures. Analysts have noted the company’s ability to navigate these challenges, although no specific upgrades or downgrades were mentioned in recent reports. The financial community continues to monitor Lululemon’s performance closely, given the global economic conditions. Investors remain attentive to further developments as the company progresses through the fiscal year.
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