Lululemon's price target slashed to $324 at Wedbush

Wedbush has lowered its price target on Lululemon to $324 from $400. The analyst is expecting downwardly revised guidance on the horizon. Market Domination Hosts Josh Lipton and Seana Smith report more on the move despite the firm maintaining its Outperform rating on the stock.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl

Transcripción del vídeo

Now let's get to our call of the day Wedbush.

Lowering its price target on Lululemon from 400 to 324, they note signing the note, signing a likely downwardly revised guidance on the horizon.

Now Wedbush does have an outperform still on this name, so their fans, they do adjust their price target there.

And here's what they say, Shana telling clients Lulu has hit unexpected turbulence this year.

Exacerbated, they say, by last month, product quality issues with their new breeze through leggings line.

Considering that they had to pull the products from the shelves, they say, we believe this is going to lead to downwardly revised guidance when report Q two EPS after the close tomorrow.

When you take a look at the underperformance that's up on your screen right now, especially even since the start of the year, they're also making the argument that maybe a much of this has already been priced into the stock, which explains the price target that they do have on a 12 month basis, and they outperform rating.

But it's clear that the challenges here for Lulu Lemon do remain.

You talk about the fact that they're pulling the breeze through pant.

Actually, what I thought was interesting in this note was the comparison that they made to back to 2013.

I don't know how many of you really remember this, but when they had the see through pants issue now, not to the extent they're saying it's gonna be a little bit different this time around.

They don't think they're gonna be hit as hard as they were back at with the whole see through pants scandal just around 11 years ago.

But they are making the argument that they do think it's going to be a significant hit and enough there to lower their sales estimate for this quarter here and going forward.

So again, some questions just about, I guess, how long it's going to take in order for them to rebound or regain some of that loss momentum because of this.

Their hope, they say, is that God's revision is a clearing event.

Corner Wedbush, we will say