Lululemon Athletica Inc. (NASDAQ: LULU) is down and out… Despite only about 800 stores around the world, Lululemon’s days of being considered a growth stock are going to be harder and harder to justify ahead whether tariffs are resolved or not.
Last Friday’s drop to $167.80 from $206.09 after earnings ((that was -18.6% in one trading day) was a bad enough thing to witness, but the stock was challenging $165.00 late on Tuesday.
This stock is down 56% Year-to-Date and down 34% from a year ago. Wall Street has abandoned most of its Buy/Outperform ratings and even those who did not now have issued price target cuts so bad it makes investors cringe to still even hear “Buy” or “Outperform.”
Lululemon’s guidance as U.S. sales dragged, and now its forward valuation based on earnings per share guidance of $12.77 to $12.97 was down from its prior guidance of $14.58 to $14.78 (per share). And its sales guidance was lowered to a range of $10.85 billion to $11 billion, from $11.15 billion to $11.3 billion issued previously. The company put the cost of higher tariff rates against its profits down by about $240 million for the year.
Despite the negativity, LULU’s revenue rose about 7% to $2.53 billion to a level barely shy of expectations from Wall Street at the time. Its sales in the Americas segment rose 1%, while international sales rose by 22%.
It was in August of 2024 that Oggonomics had mentioned LULU’s shares were back down to the early 2020 pre-pandemic peak selling, when the shares fell to $165. Sound familiar? The difference then was that its stock rapidly recovered to about $350 by the end of 2020 and then experienced a multi-year high of around $475 in November-2021 before a blow-off peak to above $500 in December 2023. Now it is right back to where it was and the overall tone is much worse. Much worse!
Lululemon’s domestic struggles are reportedly being compounded by the end of the “de minimis exemption in tariffs, but Wall Street just abandoned all hope of a real recovery despite some broader economy-wide tariff reprieve in recent news.
While price targets have been seen getting cut in recent days, here is a montage of the tracked analyst report summaries with downgraded and/or slashed price targets for lululemon’s stock:
Barclays – maintained Equal Weight, target to $180 from $209
Bernstein – maintained Outperform, target to $220 from $350
BofA – downgraded to Neutral from Buy, target to $210 from $300
BTIG – maintained Buy, target to $303 from $375
Citi – maintained Neutral, target to $190 from $22
Evercore ISI – downgraded to In-Line from Outperform, target to $180 from $265
Goldman Sachs – maintained Neutral, target to $200 from $232
JPMorgan – maintained neutral; target to $191 from $224
Needham – maintained Buy, target to $192 from $238
Oppenheimer – downgraded to Perform from Outperform
Piper Sandler – maintained Neutral, target to $165 from $200
RW Baird – maintained Outperform, target to $225 from $260
Stifel – downgraded to Hold from Buy, target to $205 from $324
TD Securities – maintained Buy, target to $220 from $298
UBS – maintained Neutral, target to $185 from $240
Wells Fargo – maintained Equal Weight, target to $160 from $205
William Blair – downgraded to Market Perform from Outperform
Not a single analyst upgrade was actually seen!
As Oggonomics has maintained for quite some time, the process of becoming a value stock after having been a growth stock is not usually a pleasant ride for investors.
