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Investing.com - TD Cowen has reduced its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $298.00 from $321.00 while maintaining a Buy rating on the stock. The company, currently trading at $204.50, appears undervalued according to InvestingPro analysis, with the stock trading near its 52-week low of $185.95.
The firm cited tougher macroeconomic conditions and increased competition facing both Lululemon’s physical stores and e-commerce operations. TD Cowen also noted concerns about merchandising and design in non-core categories, suggesting the company has expanded beyond areas where it traditionally excels. Despite these challenges, InvestingPro data shows the company maintains impressive gross profit margins of 59.3% and operates with moderate debt levels.
TD Cowen now forecasts Q2 2025 same-store sales growth of just 1%, with a 4% decline in the Americas offset by 14% growth in China and 13% growth in other regions. The firm projects same-store sales growth of 3% for Q3 2025 and 2% for Q4 2025.
The research firm lowered its fiscal year 2025 gross margin estimate to reflect a year-over-year decline of 157 basis points, attributing 40 basis points to increased markdowns and 50 basis points to higher tariffs. TD Cowen’s FY2025 earnings per share estimate now stands at $14.09, below the consensus of $14.51.
For fiscal year 2026, TD Cowen projects Americas same-store sales growth of 2% and estimates earnings per share of $15.21, compared to the consensus estimate of $15.48. With the next earnings report due in 10 days, investors can access comprehensive analysis and 12 additional ProTips through InvestingPro’s detailed research report.
In other recent news, Lululemon Athletica Inc. has seen several adjustments in its stock price targets by major financial firms. UBS has lowered its price target to $240, citing concerns over U.S. sales momentum and a modest 1% growth in U.S. sales for the second quarter. Wells Fargo (NYSE:WFC) has also reduced its price target to $225 due to anticipated downward revisions in earnings estimates, indicating potential future guidance reductions. Piper Sandler set a new target of $200, highlighting increased competition from brands like Alo and Vuori, which have gained market share in key states and are expanding internationally.
Jefferies decreased its target to $160, pointing to growth concerns, especially as Lululemon opens its first store in Milan amid competitive pressures from Alo Yoga’s upcoming launch in Rome. Evercore ISI has cut its price target to $265, removing Lululemon from its Top 5 Outperform list and replacing it with Ulta Beauty (NASDAQ:ULTA). This new target reflects an 18% upside based on a revised earnings estimate for 2026. These developments reflect a cautious stance from analysts amid competitive and growth challenges facing Lululemon.
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