Key highlights:
- JPMorgan analyst Matthew Boss cut his price target on LULU stock from $154 to $95
- This comes as shares have fallen almost 80% from their all-time high
- Truist and Bank of America have also cut their targets on the athletic apparel stock
JPMorgan slashed its price target on Lululemon after a disappointing second-quarter report. Analyst Matthew Boss lowered his target by 38%, cutting it to $95 from $154 while keeping his “Neutral” rating.
The company’s fiscal second-quarter results that missed revenue expectations and a third-quarter outlook that fell well below what Wall Street had projected are the core reasons for the price slash, according to the Fly.
JPMorgan slashes Lululemon price target after earnings miss
The firm’s earnings report released last week shaped his revised view. Full-year revenue guidance was cut by 5% to 7% from the previous year, while full-year earnings guidance dropped to a range of $9.48 to $9.73 per share. Also, third-quarter revenue and earnings guidance were reduced due to the lackluster performance.
Boss told investors the company’s third-quarter earnings outlook is about 60% below Wall Street consensus. With revenue forecast to fall and marketing costs staying elevated, profit margins are expected to keep shrinking over the next year.
Lululemon stock has fallen almost 80% from its all-time high even with the S&P 500 trading at record levels.
Demand slows in North America and China
The company built its brand on premium leggings, yoga wear and a loyal shopper base. This helped it grow in North America and even faster in China. However, this has changed.
Second-quarter net revenue dropped by 4% to $2.4 billion, and comparable sales fell 10%. North America also saw its comparable sales crash 12%. Business across the Americas region, which accounts for two-thirds of total sales, declined by 8%.
The slow growth did not stop there. China’s revenue increased by 4% on a reported basis but fell 2% once adjusted for currency, while comparable sales declined 8% year over year.
This was attributed to the negative online commentary that hurt brand sentiment in China. In North America, in-store traffic slowed, and new product launches failed to resonate with shoppers.
Other analysts split on LULU Stock as investors keep buying
JPMorgan was not the only firm that turned bearish. Telsey Advisory Group cut its price target to $110 from $122. The firm maintained a “Market Perform” rating, saying the company needs improvements to its product lineup.
Truist took a more bearish stance, lowering its target to $82 from $94 with a “Sell” rating. Analyst Joseph Civello said the company’s fiscal 2026 outlook has taken another hit amid the challenges spread on its international operations. Bank of America also cut its target to $122 from $140, keeping a “Neutral” rating.
However, there are still bullish calls. Investor Michael Burry said the stock’s depleted price is just due to recent weakness and could offer upside if growth returns.
Some institutional investors share the same views. Regulatory filings show TD Waterhouse Canada increased its position by 74% in the last quarter. Swiss Life Asset Management and MUFG Securities EMEA also did the same. Institutional investors and hedge funds collectively own over 85% of the company’s shares.
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