LULU: Future NFL Apparel Partnership Will Drive Renewed Brand Momentum

Analysts have lowered their average price target on lululemon athletica by a significant margin. They cite persistent U.S. headwinds, tariff impacts, and increasing uncertainty around the company's growth and earnings visibility in the near term.

Analyst Commentary

Recent Street research on lululemon athletica reflects a notable shift in sentiment, with analysts issuing a range of cautious updates. The feedback highlights both positive aspects and areas of concern relating to the company’s growth trajectory, competitive positioning, and valuation.

• Some bullish analysts maintain a positive outlook on lululemon’s long-term growth potential. They suggest the stock’s recent selloff and lower valuation may offer an attractive entry point for investors who believe in the brand’s resilience.
• Opportunities tied to international expansion and the ability to mitigate tariff impacts have led to incremental increases in future earnings estimates from select analysts. This is particularly the case when management executes successful cost-saving or growth initiatives.
• The company’s strong brand and historical outperformance in sales per square foot and margins are cited as foundational assets. These could underpin a recovery if consumer engagement improves and new product launches resonate.
• A few analysts suggest that value could emerge as market expectations reset, which could pave the way for re-rating if lululemon can deliver on upcoming growth targets.

• Bearish analysts flag concerns over declining U.S. trends. They note that mounting competition and macroeconomic headwinds threaten both growth and earnings visibility in the near term.
• Recent partnerships and strategic moves are viewed with skepticism, raising questions about clarity of vision and the risk to the brand’s premium positioning.
• A series of price target reductions and downgrades cite heightened uncertainty around the timing of a turnaround in key markets, especially the U.S., and a lack of near-term catalysts that would drive sustained upside.
• There is widespread caution regarding margin contraction due to tariff pressures and the end of beneficial exemptions. Analysts are also concerned that consensus earnings estimates for 2025 and 2026 may remain too optimistic given external shocks and slower demand.

What's in the News

• Lululemon has signed its first partnership with the NFL and Fanatics to launch a new fan apparel collection. Shares rose in pre-market trading after the announcement (Bloomberg).
• Citi has lowered its price target for Lululemon from $270 to $220, maintaining a Neutral rating. The bank expects a small earnings beat for Q2 but has cut guidance due to tariff impacts (Citi).
• The company issued earnings guidance for Q3 2025, expecting net revenue between $2.470 and $2.500 billion. This reflects year-over-year growth of 3% to 4%. Projected diluted earnings per share are between $2.18 and $2.23.
• Lululemon revised its full-year 2025 outlook, guiding for net revenue of $10.850 to $11.000 billion. The outlook was impacted by higher tariffs and the removal of the de minimis exemption, with an estimated $240 million reduction in gross profit.
• From May to August 2025, the company completed a share repurchase of 1.27% of its shares for $349.05 million. This brings total repurchases under the current program to 6.15% of shares for $2.21 billion.

Valuation Changes

• Fair Value Estimate: Remains unchanged at $194.36 per share.
• Discount Rate: Increased slightly from 8.12% to 8.25%.
• Revenue Growth: Remained flat, moving minimally from 5.06% to 5.06%.
• Net Profit Margin: Marginally decreased from 14.18% to 14.17%.
• Future P/E Ratio: Increased moderately from 14.94x to 14.99x.