What Happened?
Shares of athletic apparel retailer Lululemon (NASDAQ: LULU) jumped 4.4% in the afternoon session after BNP Paribas Exane upgraded the stock to Neutral from Underperform, setting a new price target of $146. The upgrade came after the shares had fallen about 65% since the firm's previous downgrade, leading the analyst to note that the current valuation was "pricing in a lot of bad news." The firm also pointed to potential positive developments that could help the stock. These included a partnership with American Express Platinum and the possibility of "founder-led activism." Analysts suggested that most negative expectations from Wall Street were already factored into Lululemon's stock price.
After the initial pop the shares cooled down to $174.71, up 4.4% from previous close.
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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 25 days ago when the stock dropped 2.9% on the news that Needham downgraded the stock to "Hold" from "Buy," citing a challenging competitive landscape and weakness in its U.S. business.
The downgrade followed a series of similar moves from other analysts. Needham noted that North American sales trends had worsened, with comparable sales declining in the first two quarters of 2025. The firm expressed concern that the competitive environment, with brands like Alo, Vuori, and Fabletics offering similar "athleisure" options, was stifling Lululemon's growth. Additionally, the company was more impacted by tariffs on e-commerce orders than expected after the removal of a key import duty exemption. These factors led Needham to believe that Wall Street's profit forecasts for 2026 looked too high, and they warned of potential downside risk for the stock over the next year.
Lululemon is down 53.1% since the beginning of the year, and at $174.71 per share, it is trading 58.5% 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 $529.36.
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