Lululemon Sees Multiple Wall Street Downgrades Amid US Struggles, Stock Tumbles 19% Pre-Market

Bernstein stated that the near-term outlook for Lululemon appears even more challenging as management attempts to revitalize the struggling U.S. business with new initiatives, while increasing marketing expenditures in China.

Lululemon Athletica (LULU) was the second-most trending stock on Stocktwits on Friday morning, as it experienced multiple price target cuts and downgrades from Wall Street following its second-quarter results, where the management acknowledged product missteps and a struggling U.S. business.

Shares of Lululemon were down nearly 19% before the bell on Friday after the sportswear maker cut its annual profit and sales forecast. The retail user message count on the stock jumped over 1,330% on Stocktwits in the last 24 hours, as of Friday morning.

Bernstein lowered its price target on Lululemon to $220 from $350 and maintained an ‘Outperform’ rating, according to TheFly. The firm noted Lululemon's quarterly print showed a double whammy of continued U.S. slowdown plus a potential deceleration in the China business.

The firm added that this makes the near-term view even more challenging as management tries to revive the struggling U.S. business with new initiatives, while increasing marketing spend in China.

However, retail sentiment on Lululemon improved to ‘extremely bullish’ from ‘bullish’ territory a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.

Stifel downgraded Lululemon to ‘Hold’ from ‘Buy’ with a price target of $205, down from $324. Lululemon cut its fiscal 2025 outlook meaningfully due to challenges in the domestic market and removal of the de minimis exemption, Stifel analyst Peter McGoldrick said. He believes "reigniting" brand momentum in the U.S. is likely to take longer than previously anticipated. 

CEO Calvin McDonald stated that he now believes the firm has let its product life cycles run too long within many of our core categories, particularly in lounge and social. “We've become too predictable within our casual offerings and missed opportunities to create new trends,” he said. 

A user on Stocktwits opined that Lululemon’s quality has declined over the last few years.

Evercore ISI downgraded Lululemon to ‘In Line’ from ‘Outperform’ and lowered its price target to $180 from $265. Telsey Advisory downgraded the stock to ‘Market Perform’ from ‘Outperform’ with a price target of $200, down from $360. Oppenheimer, too, downgraded Lululemon to ‘Perform’ from ‘Outperform.’

Lululemon shares have declined over 46% this year and lost nearly 19% of their value in the last 12 months.

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