Lululemon Athletica is viewed warily by Jefferies with earnings approaching
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Jefferies kept a bearish view on Lululemon Athletica (NASDAQ:LULU) on Tuesday with new pricing data and search interest trends pointing to downside for the normally strong brand.
Analyst Randal Konik and team said Lululemon (LULU) web visits fell 22% month-over-month in February and year-over-year growth slowed for the third consecutive month. In addition, store checks indicated that belt bag interest may be weakening in a development that could impact upcoming earnings reports.
In terms of pricing, LULU was noted to have increased discounts in January to a mix of 19.7% vs 18.7% a year ago and 15.8% in December.
The takeaway from Jefferies is that consensus estimates on Lululemon (LULU) may be too high given the increasingly competitive athletic apparel market. The firm's rating on LULU is kept at Underperform, while the price target of $200 reps downside potential of more than 30%.
Lululemon (LULU) is expected to post its FQ4 earnings report later in March. See the consensus estimates and earnings history.