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Investing.com - Rothschild Redburn lowered its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $160.00 from $230.00 on Friday, while maintaining a Sell rating on the athletic apparel retailer. The stock, currently trading near its 52-week low of $162.80, has declined over 47% in the past six months. According to InvestingPro data, the company maintains strong fundamentals with a healthy gross margin of 59.1%.
The significant reduction reflects challenges in North America’s top-line performance, slowing growth in Greater China, and the impact of tariffs and the removal of the de minimis threshold for imports into the United States.
Rothschild Redburn noted that these factors will create a six-month impact on estimates for the current fiscal year, with the full effect being felt in the year ending January 2027.
The firm expressed concern about Lululemon’s inventory levels, which have increased more than 20% while revenue grew less than 5%. Despite this inventory buildup, the company has only guided for a 50-basis-point markdown drag, which the research firm views as a potential downside risk.
Rothschild Redburn’s new $160 price target is based on a multiple of 13 times the company’s estimated January 2027 earnings per share, reflecting caution about product newness initiatives, customer reengagement efforts, and premium growth outside the U.S. as the Chinese market matures.
In other recent news, Lululemon Athletica Inc. reported mixed second-quarter earnings, with revenue reaching $2.53 billion, which fell short of expectations by $15 million. The company also reported normalized earnings per share of $3.10, slightly down from $3.15 year-over-year, though this exceeded consensus estimates by $0.24. KeyBanc Capital Markets downgraded Lululemon’s stock from Overweight to Sector Weight due to weak U.S. growth. CFRA lowered its price target for Lululemon to $270 from $375, citing product issues and tariff headwinds, while maintaining a Strong Buy rating. Truist Securities downgraded the stock from Buy to Hold and reduced its price target to $170, highlighting disappointing second-quarter results and tariff concerns. Despite these challenges, Truist reiterated a Buy rating with a $290 price target, although they noted a decline in comparable sales in the Americas. Piper Sandler also reduced its price target to $165, maintaining a Neutral rating, as they observed fatigue in Lululemon’s casual wear categories. Performance categories, however, continue to show positive results, representing 60% of sales.
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