Evercore ISI Group Downgrades Lululemon Athletica to In-Line, PT to $180.

Evercore ISI Group Downgrades Lululemon Athletica to In-Line, PT to $180.

September 02, 2025

Evercore ISI Group has downgraded Lululemon Athletica Inc. (NASDAQ: LULU) from "Outperform" to "In Line," reducing its price target to $180.00 from $265.00. The downgrade follows Lululemon’s second-quarter update, which revealed flat year-over-year sales in the U.S. market compared to 2% growth in the first quarter. Additionally, Canada’s growth decelerated, showing an 8 percentage point sequential decline in the second quarter excluding certain items [1].

Evercore ISI cited deteriorating key performance indicators as the primary reason for the downgrade. The company’s earnings per share estimates were lowered to $12.80 for 2025 (down from $14.50) and $12.25 for 2026 (down from $15.85), reflecting concerns about the company’s growth trajectory [1]. Despite maintaining impressive gross margins of 59.1% and operating with a moderate debt level, Lululemon faces challenges, particularly in the U.S. market and China, where growth has slowed [1].

The removal of the de minimis exemption is seen as a significant issue by Evercore ISI, impacting Lululemon more than previously anticipated. Additionally, the company’s push into new products to revitalize sales has not resonated with consumers, suggesting that innovation efforts are deteriorating [1]. Lululemon’s fiscal year 2025 sales outlook for China was also reduced from 25-30% growth to 20-25% [1].

Other financial institutions have also adjusted their outlook on Lululemon. Goldman Sachs lowered its price target to $200 from $232, maintaining a Neutral rating. William Blair downgraded Lululemon from "Outperform" to "Market Perform," expressing concerns over U.S. sales recovery and tariff impacts. Stifel also downgraded the company from "Buy" to "Hold," reducing its price target to $205 from $324, citing domestic market pressures and the removal of the de minimis exemption [1].

Institutional investors continue to show interest in Lululemon, with Baird Financial Group Inc. increasing its stake by 4.2% in the first quarter of 2025, owning a total of 61,250 shares worth approximately $17.34 million [2]. Despite the challenges, Lululemon reported a 7.3% increase in revenue year-over-year in its latest earnings report, with revenue of $2.37 billion and an EPS of $2.60, aligning with analyst expectations [2].

References:
[1] https://www.investing.com/news/analyst-ratings/lululemon-stock-downgraded-by-evercore-isi-on-slowing-growth-and-tariff-concerns-93CH-4226227
[2] https://www.marketbeat.com/instant-alerts/filing-baird-financial-group-inc-buys-2471-shares-of-lululemon-athletica-inc-lulu-2025-09-02/