Jefferies Downgrades Lululemon (LULU) Stock to ‘Sell’


  • Lululemon (LULU) stock is suffering after getting hit with a downgrade.
  • Jefferies analyst Randal Konik just gave LULU stock a $200 price target.
  • Konik also dropped shares to a “sell” rating.
Lululemon storefront in a mall. People shop inside the store among the clothes. LULU stock.

Source: lentamart / Shutterstock

Lululemon (NASDAQ:LULU) stock is slipping on Tuesday after Jefferies analyst Randal Konik hit shares with a downgrade.

That downgrade sees Jefferies dropping shares of LULU stock to an “underperform” rating. Of course, that’s bearish compared to analysts’ consensus “buy” rating on MarketBeat, which is based on 19 “buy” ratings, six “hold” ratings and a single “sell.”

To go along with the downgrade, Konik also placed a price target of $200 per share for LULU stock. That’s far lower compared to the consensus price target of around $403 per share. It also represents a potential 35% downside from the current stock price.

Why the Bearish Stance on LULU Stock?

Why is Konik so down on LULU stock? Here’s what the Jefferies analyst had to say about the rating in a note obtained by Yahoo! Finance:

“Our downgrade thesis is based on a view that long-term projections are aggressive across total revenues, EBIT [earnings before interest, taxes] margins, men’s, and international. We believe in coming quarters, Lululemon will have to walk back its long-term projections as competition rises, end markets weaken, and promos increase industry-wide.”

So, Lululemon’s long-term projects made earlier in the year may soon prove to be overly optimistic. The company said that it expects to see revenue double by 2026. But that doesn’t seem as likely to happen as workout equipment loses ground amid inflation and other macro factors.

LULU stock is down 1% as of Tuesday morning. Shares are also down about 22% since the start of the year.

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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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