Morgan Stanley cautious on Lululemon, while BofA sees shares rise

Investing.com — Analysts expressed mixed views ahead of Lululemon Athletica's second-quarter results. Morgan Stanley warned that slowing North American sales could impact earnings, while Bank of America took the stock's recent decline as an opportunity to buy.

Morgan Stanley lowered its price target to $223, while maintaining its Equal Weight rating. The bank said Wall Street could miss Wall Street's earnings forecasts as the clothing maker weakened U.S. sales trends and management lowered its full-year guidance due to tariffs.

The brokerage forecast earnings of $2.80 per share for the second quarter. This figure fell short of market expectations. He also stated that he did not see a recovery in jobs in the Americas in the near term.

Morgan Stanley analyst said: “In our view, the NTM risk-return ratio remains on the upside as the rate of change story in America is closer than expected. But even if there is a milestone, a significant valuation re-rating seems unlikely.”

However, in reiterating its Buy rating, Bank of America lowered its price target from $370 to $300.

BofA noted that Lululemon's valuation, which is less than 12 times its 2026 earnings, is at historic lows and offers an attractive entry point.

The bank also said that sales growth of 7-8% in the second quarter and stability in China and international markets could help revalue the stock.

Lululemon shares have fallen nearly 40% since June amid investor concerns about its ability to revive growth in North America, its once strongest market.

BofA analysts said: “We think the decline in the stock presents a particularly good opportunity to have a strong growth company with high margins.”

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