Lululemon Slumps As Analyst Warns Of Plateau In Athleisure

After initially upgrading lululemon (LULU) to Buy in early January, Jefferies analyst Randal Konik downgraded the apparel company to Hold today, arguing that his investment thesis has largely played out and that the larger athleisure trend is starting to peak.

JEFFERIES SEES ATHLEISURE PLATEAU: In an investor note issued Thursday, Jefferies' Randal Konik took lululemon to Hold while cutting his price target to $76 from $80. The analyst said key tenets of his Buy thesis have "largely played out," including a recovery in margins and comparable sales. The analyst reassures investors that lululemon still has "ample opportunity" to grow its top-line and expand operating margins, but believes those tailwinds are already reflected in the stock. Notably, Konik believes that the athleisure trend is "beginning to plateau," and he expects "more modest" growth going forward even as competitors increasingly filter into the maturing space. PRICE ACTION: Shares of lululemon are down 2.86% to $66.28 in afternoon trading.

Read more at:
http://thefly.com/landingPageNews.php?id=2428225