What Happened?
Shares of athletic apparel retailer Lululemon (NASDAQ: LULU) fell 4.6% in the morning session after investors grew concerned over expectations of weak financial results, highlighted by negative analyst commentary.
Specifically, Jeffries reiterated its 'Underperform' rating and cut its price target to $120, citing risks of shrinking margins and pricing pressures. This outlook reflected broader worries about the company's performance, including several quarters of softer U.S. demand and inconsistent product execution. The commentary painted a picture of declining momentum for the athletic apparel maker ahead of its upcoming earnings report. While the broader consensus rating from analysts remained a 'Hold,' the recent negative sentiment appeared to weigh on the stock.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lululemon? Access our full analysis report here.
What Is The Market Telling Us
Lululemon’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 4.1% on the news that positive results from peer retailer Dollar General pointed to resilience in consumer spending. Dollar General raised its full-year guidance after its net sales for the third quarter rose 4.6% to $10.6 billion. The company noted that the sales increase was driven by improved customer traffic. This positive report from a major retailer suggested that shoppers were still spending, which often creates optimism for other companies in the same sector, including apparel brands like Lululemon.
Lululemon is down 51.1% since the beginning of the year, and at $182.24 per share, it is trading 56.7% below its 52-week high of $421.16 from January 2025. Investors who bought $1,000 worth of Lululemon’s shares 5 years ago would now be looking at an investment worth $491.13.
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