Shares of Lululemon (LULU) sank by more than 7% at the time of writing as the athleisure trend seems to be losing its appeal and making the retailer more vulnerable to slowing consumer spending and increased competition. In fact, Citigroup has downgraded Lululemon from Buy to Hold and cut its price target by 28% to $300. Top-rated analyst Paul Lejuez mentioned that the activewear market, especially in the U.S., has significantly slowed down in 2024, and this isn’t likely to change in the second half of the year.
On top of this, Lululemon has pulled its eagerly awaited Breezethrough leggings from its website and stores due to poor reviews. They’re planning to make design tweaks, especially fixing issues with the front seam and overall look. This adds more risk to their execution.
In addition, J.P. Morgan analyst Matthew Boss also lowered his price target for Lululemon by 26% to $338 and removed it from the Analyst Focus List. However, he still believes the brand has potential both in the U.S. and internationally.
As a result of today’s downgrades, LULU stock sank by more than 7% at the time of writing.
Is LULU a Good Stock to Buy?
Overall, analysts have a Moderate Buy consensus rating on LULU stock based on 14 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 33% decline in its share price over the past year, the average LULU price target of $404.65 per share implies 60.38% upside potential.
