• Jefferies downgraded NASDAQ:LULU to "Underperform" and reduced its price target from $150 to $120 due to negative U.S. comparable sales and elevated inventory levels.
• Lululemon maintains impressive gross margins of around 60% and a debt-free balance sheet, despite challenges including a significant reliance on China's growth and resistance to price increases in the U.S. market.
• The stock's current price reflects a decrease, with potential for a positive shift in sentiment due to efforts in supply chain diversification and product refreshes.

Lululemon Athletica, listed on the NASDAQ as LULU, is a prominent player in the athletic apparel industry, known for its high-quality yoga and fitness wear. The company faces stiff competition from brands like Nike and Under Armour. On October 6, 2025, Jefferies downgraded LULU to "Underperform" while maintaining a "hold" action, with the stock priced at $175.59.

Jefferies also reduced Lululemon's price target from $150 to $120. This decision comes amid several challenges for the company. Lululemon is grappling with negative U.S. comparable sales and elevated inventory levels. These issues are compounded by changes in tariffs and de minimis rules, which are expected to cut the company's gross profit by about $240 million.

Despite these hurdles, Lululemon boasts impressive gross margins of around 60% and maintains a debt-free balance sheet. However, the company's significant reliance on China's growth, which exceeds 25% year-over-year, presents a concentration risk. This is particularly concerning given the current policy environment, which could impact Lululemon's performance.

U.S. consumers are also resisting price increases, challenging Lululemon's pricing power. The stock appears oversold, with the Relative Strength Index (RSI) nearing its lowest levels. However, there is potential for a positive shift in sentiment due to efforts in supply chain diversification, shifts in U.S. fulfillment, and product refreshes.

Lululemon's current stock price of $175.59 reflects a decrease of 1.46%, with a change of $2.61. The stock has traded between $175.52 and $179.11 today. Over the past year, LULU has seen a high of $423.32 and a low of $159.25. The company's market capitalization is approximately $19.92 billion, with a trading volume of 3,017,932 shares on the NASDAQ.