Lululemon drops over Citi downgrade, price target cuts

Lululemon (LULU) stock tumbles lower ahead of Thursday’s market close after analyst teams from Citi and JPMorgan cut their price targets on the athleisure brand: Citi downgraded the stock from Buy to Neutral and cut its price target from $415 to $300 per share; JPMorgan kept its rating at Overweight while slashing its price target lower from $457 to $338.

Julie Hyman and Josh Lipton take a look at these analyst calls referencing certain customer complaints about one of Lululemon’s latest product designs.

Lululemon’s next earnings results are scheduled for release on Thursday, August 29.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video Transcript

All right, checking in on some of our top calls of the day.

A pair of cuts has shares of Lululemon sinking Citigroup, downgrading the apparel maker to neutral from buy, slashing its target to 300 JP Morgan meanwhile, removes the stock from its analysts focus list and cuts its price target to 338.

Yikes Julie, the stock dropping to its lowest level in about four years.

The news is, the company says it’s halting sales of a product line reads through yoga wear.

I am not familiar with that.

Julie if I’m, if I’m being totally honest, but they are pausing sales to quote, make any adjustments necessary to deliver.

The best possible product experience is what they told Bloomberg in a statement and analysts are reacting and so are investors.

Um Then I love talking about little lemon, full disclosure.

I’m a little lemon uh product owner, right?

But I also just find it uh a really fascinating company here and indeed, you could be forgiven for not knowing what breathe through is because apparently it just came on the market like July 9th and then they yanked it real quick.

But the commentary around why they yanked it according to Matt Boss over at JP Morgan, the commentary around it.

I love there was a back seam in the shame of shape of a V which customers cited as unflattering, giving them a long but is one of the examples of what happened here.

Story continues

And the, the note actually has pictures of what of what the phenomenon was, but I’ll leave you to look line and see what that’s all about.

And Citigroup also downgraded the stock to from buy to neutral.

They cited less the specific bre through concerns and just more generally, um sort of lack of innovation that the act of apparel category overall is worsening.

And then Lulu specifically is not giving, for example, the color assortment that customers want.

So they, they out and now downgraded, the stock stock is now cratered about 50% this year.