JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
On Monday, Morgan Stanley (NYSE:MS) analysts downgraded Lululemon Athletica Inc. (NASDAQ:LULU) stock from Overweight to Equalweight, adding to recent pressure that has seen the stock decline nearly 18% in the past week and 34% over the last six months. The analysts also adjusted the price target for the stock to $280 from a previous target of $346. According to InvestingPro data, 20 analysts have recently revised their earnings expectations downward for the upcoming period. The decision comes amid concerns about the company’s performance in the Americas, a key performance indicator for the stock.
The analysts noted that there was an expectation for a reacceleration in Lululemon’s key performance indicator, the Americas comp, especially given the strengthening U.S. credit card sales data and a return to historical levels of newness. However, the anticipated acceleration in the first quarter did not occur, with the Americas comp showing a decline of 2% compared to a flat performance in the fourth quarter and expectations of a 1% decline on the Street. Despite these challenges, InvestingPro data shows the company maintains impressive gross profit margins of 59% and holds more cash than debt on its balance sheet.
This performance has reinforced Morgan Stanley’s concerns that newness alone may not be enough to drive growth in the company’s home market. The analysts indicated there might be other, potentially more significant factors contributing to Lululemon’s challenges in the Americas.
The firm expressed skepticism about a post-first quarter inflection in the Americas comp that underpinned the previous Overweight and bullish thesis. They believe that equity appreciation for Lululemon may be challenging while this key performance indicator remains under pressure.
In other recent news, Lululemon Athletica Inc. has experienced several notable developments. The company recently reported its first-quarter results, which led to a variety of analyst reactions. Bernstein SocGen Group maintained an Outperform rating with a price target of $350, expressing confidence in Lululemon’s long-term growth potential, particularly in China, despite challenges in the U.S. market. Conversely, TD Cowen lowered its price target to $321, citing a reduction in earnings per share guidance and a challenging earnings season influenced by tariffs. Truist Securities also adjusted its price target to $290, noting a weaker-than-expected second-quarter outlook and increased markdown pressure.
UBS further revised its price target to $290, highlighting consistent U.S. sales and strong growth in China, but also pointing to expected gross margin pressure due to markdowns. BTIG reduced its price target to $405, acknowledging Lululemon’s slightly better-than-expected first-quarter performance but emphasizing the impact of increased tariffs on future guidance. Despite these adjustments, several firms, including Truist Securities and BTIG, maintained a Buy rating, reflecting optimism about Lululemon’s long-term prospects and potential growth opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.