Citi analyst Paul Lejuez last night downgraded Lululemon Athletica (LULU) to Neutral from Buy with a price target of $400, up from $340.
The stock closed Thursday down $20.42 to $377.87.
"We have to ask ourselves if we can realistically recommend buying LULU at $400 with a call it can go to at least $460 over the next 12 months," Lejuez tells investors in a research note. The analyst concludes that he "just can't do it" at current valuation levels. Lululemon trades at nine times estimated fiscal 2021 sales and has an enterprise value of $50B, making it the most highly valued specialty retail brand ever, says Lejuez.
The analyst, who admits to loving the brand and the company's growth prospects in the near- and long-term, says the stock seems to be "pricing in perfection."
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