Top Wall Street analysts slashed their price targets on Lululemon Athletica (LULU) stock after the athletic apparel retailer lowered its full-year earnings guidance, noting a “dynamic macroenvironment.” While Lululemon narrowly exceeded Wall Street’s expectations for the first quarter of Fiscal 2025, the company cut its full-year earnings outlook amid tariff pressures and fears about an economic slowdown. LULU stock was down 19% in Friday’s pre-market trading, as of writing.
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Analysts Reduce Price Target on LULU Stock
Following the Q1 FY25 print, Bank of America Securities analyst Lorraine Hutchinson lowered the price target on Lululemon Athletica stock to $370 from $400 and reiterated a Buy rating. The 5-star analyst noted that LULU’s sales plans are on track and that while management maintained its full-year sales guidance, they lowered EPS guidance due to tariffs and a slightly more promotional outlook. Hutchinson pointed out that while the company has not witnessed a rise in markdowns, it exercised some caution in the outlook to account for slowing traffic trends and macro uncertainty.
Similarly, Citi analyst Paul Lejuez slashed his price target on LULU stock to $270 from $325 and reiterated a Hold rating. The 5-star analyst thinks that Q1 results were disappointing, with overall comparable sales growth of 1% missing the Street’s growth estimate of 4% due to weakness in China and the rest of the world (ROW). Meanwhile, comps in the Americas region were in line with expectations but still weak.
Lejuez argues that while the Q2 FY25 sales outlook was in line with consensus, the EPS guidance missed estimates as tariffs and investments are expected to impact margins. The analyst also thinks that though LULU has newness in its assortment, it’s not driving traffic higher, making it difficult to see how the U.S. business will return to growth in the near term. He also noted the 23% rise in inventory, which raises concerns about potential margin pressure.
Additionally, Evercore analyst Michael Binetti lowered the price target on Lululemon Athletica stock to $320 from $400 and reaffirmed a Buy rating. The 5-star analyst contends that the Q1 results were not as bad as the aftermarket reaction, as the company hit its Q1 FY25 revenue target, maintained full-year top-line guidance, and stated that China revenues will reaccelerate to 25% to 30% in Q2 from 21% in the first quarter. He thinks that the 20% post-results decline in the stock for a 2% EPS cut seems “excessive.” Based on Evercore’s channel analysis, Binetti is confident that Lululemon’s innovation is starting to ramp and that U.S. comparable sales can begin to improve as strong innovation expands to full distribution over the next few months.
Is LULU a Good Stock to Buy Now?
With 16 Buys, nine Holds, and two Sell recommendations, Wall Street has a Moderate Buy consensus rating on Lululemon stock. The average LULU stock price target of $345.58 implies 4.5% upside potential from current levels.
These price targets and ratings might be revised further based on the reactions of more analysts.
