Investing.com - Jefferies lowered its price target on Lululemon Athletica Inc. (NASDAQ: LULU ) to $175.00 from $200.00 on Tuesday, while maintaining an Underperform rating on the athletic apparel retailer’s stock. According to InvestingPro analysis, LULU is currently trading above its Fair Value, aligning with Jefferies’ cautious stance.

The research firm cited field observations indicating Lululemon "has lost its core" with product cohesion "breaking down," sell-through "softening," and markdowns negatively impacting profit margins. The company’s gross margin stands at 57%, while inventory turnover has slowed to 3.2x annually.

Jefferies expressed skepticism about the company’s No Line legging product line, describing the buzz as "overstated" and noting "few signs of sustainable growth drivers" for the athletic apparel maker.

The firm highlighted additional concerns including "bloated inventories, weakening traffic, and rising competition" across Lululemon’s business operations.

These factors collectively contribute to "building" risk to Lululemon’s earnings potential, according to Jefferies’ analysis, prompting the 12.5% reduction in its price target for the company’s shares.

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