Lululemon's Selloff Presents a "Particularly Good Opportunity" to Buy: BofA Cuts Price Target to $300

BofA lowered its price target for Lululemon to $300 from $370, but maintains a Buy rating. The firm views the recent selloff as a good opportunity to own a strong growth company with high margins. To re-rate, Lululemon needs to execute on Q2 sales growth of 7%-8% and reiterate a similar range for the second half.

In a recent development, Bank of America (BofA) has reduced its price target for Lululemon (LULU) from $370 to $300, while maintaining a Buy rating. The firm views the recent selloff as an opportunity to invest in a strong growth company with high margins. To re-rate the stock, Lululemon needs to execute on Q2 sales growth of 7%-8% and reiterate a similar range for the second half of the year [1].

Lululemon's stock has been under pressure, falling 2.42% in the latest close session to $202.57. The company's shares have lost 5.4% over the past month, lagging the broader Consumer Discretionary sector's gain of 1.41% and the S&P 500's gain of 2.65%. Analysts are closely watching the upcoming earnings release, expected on September 4, 2025, where Lululemon is anticipated to report an EPS of $2.85, marking a 9.52% fall compared to the same quarter of the previous year [1, 2].

BofA's revised target reflects the market's concerns about the company's growth trajectory. Lululemon is currently trading at a Forward P/E ratio of 14.47, which is a discount compared to its industry average Forward P/E of 16.08. The company also has a PEG ratio of 1.78, indicating a reasonable valuation given its expected earnings growth rate [1].

Lululemon's strategic focus on product innovation and global expansion has been a key driver of its success. The company's Q1 fiscal revenue of $2.4 billion, representing 7% year-over-year growth, and strong earnings per share of $2.60, ahead of expectations, underscore its solid execution [3]. However, the market's expectations for future growth have been tempered by the recent selloff, and Lululemon will need to deliver on its growth targets to regain investor confidence.

Investors should also pay attention to any latest changes in analyst estimates for Lululemon. These revisions can provide insights into the company's near-term business trends and their impact on share price momentum [1, 2].

References:
[1] https://finance.yahoo.com/news/lululemon-lulu-dips-more-broader-214502069.html
[2] https://www.nasdaq.com/articles/lululemon-lulu-dips-more-broader-market-what-you-should-know-0
[3] https://www.tikr.com/blog/down-61-from-all-time-highs-is-lululemon-stock-finally-a-good-buy-right-now