Lululemon (LULU): Is the Recent Drop an Opportunity? A Fresh Look at Valuation After Analyst Downgrades and U.S. Headwinds

Lululemon Athletica (LULU) is experiencing a tough stretch, with analysts dialing back expectations for 2025 as U.S. demand softens and tariff increases eat into margins. Competitive pressure is also weighing on the stock.

See our latest analysis for lululemon athletica.

This year has been a bruising one for lululemon athletica’s shareholders. After underperforming on U.S. demand and facing tariff hits, the latest 1-year total shareholder return sits at -39.8%, while the year-to-date share price return is down 55%. Short-term momentum is clearly still fading, but the company’s strong global brand and profitability could set the stage for a rebound if consumer sentiment shifts and international gains accelerate.

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With shares now trading well below analysts’ targets and valuation metrics flashing at multi-year lows, investors are left to weigh whether lululemon’s struggles are already reflected in the stock price or if downside risks remain. This raises the question: has the market overcorrected, or is more turbulence ahead?

Most Popular Narrative: 25.8% Undervalued

Lululemon's narrative suggests the stock may be trading far below its true worth, with a fair value that outpaces recent prices. Momentum appears negative, but there could be upside if these underlying assumptions hold true.

Despite macroeconomic uncertainties and market volatility, Lululemon has shown resilience. Its strong market position in the premium athleisure segment and its ability to adapt to changing consumer preferences have helped it navigate challenges effectively.

Read the complete narrative.

Curious what powers this confidence? The narrative models Lululemon’s rebound on proven financial strengths and a formula for faster growth that rivals have rarely pulled off. See which aggressive forecasts and strategic levers could shift the story from crisis to comeback. The rationale may surprise you.

Result: Fair Value of $225.76 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing U.S. demand and ongoing cost pressures remain key risks that could challenge the company’s recovery and could impact future performance.

Find out about the key risks to this lululemon athletica narrative.

Build Your Own lululemon athletica Narrative

If this conclusion does not fit your perspective or you would rather analyze the numbers yourself, you are free to craft your own narrative in just a few minutes. Do it your way

A great starting point for your lululemon athletica research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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