Lululemon Stock Trades at 2018 Levels Despite Record Revenue: Time to Buy?

Shares of athleisure giant Lululemon Athletica Inc (NASDAQ: LULU) are currently trading just above $160, up over 10% from the multi-year lows they set in the last week of March. While that bounce is encouraging, it’s done little to change the bigger picture. The stock remains down around 28% from its December highs and nearly 70% from its all-time peak, making it one of the more painful holds in the retail and apparel space over the past couple of years.

For those who have invested through that selloff, the pain is understandable. However, for those of us on the sidelines, the setup is looking far more interesting. Let’s jump in and take a closer look at why this could soon be the mother of all buying opportunities.

A Sharp Decline That Might Have Gone Too Far

Lululemon’s selloff has been driven primarily by a loss of confidence in its growth trajectory, particularly in North America. What was once a consistent engine of expansion has begun to slow, raising concerns about market saturation and shifting consumer preferences.

At the same time, the broader narrative around premium consumer brands has become more challenging. Investors have become less willing to pay up for growth, especially when that growth is slowing.

That shift in sentiment has played a major role in compressing Lululemon’s valuation over the past year, sending shares to new lows even as earnings remained solid. The result is a stock that’s gone from being priced for perfection at the end of 2023 to one that’s back trading at 2018 levels while printing record revenues.

In addition, increasing competition in the athleisure space and changing consumer preferences have not been kind to Lululemon. For a brand that was once the disruptor, it’s been learning the hard way what it’s like to be disrupted.

The Business Is Holding Up Better Than the Stock

All that being said, what makes the current setup so interesting is that the underlying business hasn’t deteriorated to the extent that the share price might suggest. Lululemon has continued to deliver solid results, consistently topping analyst expectations. This was the case in both December and last month, with the latter seeing the company report record quarterly revenues.

There’s also a growing sense that the company’s 2026 Action Plan is gaining traction. Management is going all-in on reaccelerating growth in North America through product innovation, faster development cycles, and improved operational efficiency aimed at winning back high-value customers.

At the same time, international markets are providing an important offset. Growth in China remains strong, and the company’s entry into India adds another potential long-term driver. This diversification helps reduce reliance on North America and supports a more balanced growth profile going forward. Taken together, these factors suggest that while the valuation and stock have been under pressure, the fundamentals are far from broken.

Valuation and Analyst Targets Highlight the Opportunity

The disconnect between price and fundamentals becomes even clearer when looking at Lululemon’s valuation. The stock is currently trading at a price-to-earnings ratio of around 12X, close to its lowest level in years and significantly below the 18X multiple it traded at this time last year. For a company still delivering record revenue, while its stock trades back at 2018 levels, the sense that the stock has been oversold speaks for itself.

Recent analyst updates reinforce this point. JPMorgan Chase and Robert Baird are just two of several that have maintained Neutral or equivalent ratings in recent weeks, yet their price targets of $196 and $190, respectively, sit well above LULU's current price of $160. In fact, based on those so-called Neutral ratings alone, there’s as much as 22% in potential upside from where the stock currently sits.

All that makes for a rare setup. When even the more cautious analysts have price targets that scream upside, it suggests the market has become overly pessimistic in its pricing of the stock.

Early Signs of a Bottom, But Risks Remain

The recent bounce off multi-year lows suggests that selling pressure may be easing. While it is still early, this kind of price action can often mark the initial stages of a bottom forming, particularly when supported by improving sentiment and stable fundamentals.

At the same time, this is far from a risk-free opportunity. There’s no getting away from the fact that the stock remains in a downtrend, and it will take more than a short-term rally to reverse that pattern fully. Lululemon must also continue not only to deliver decent quarterly reports but also to instill fresh confidence that its turnaround is gaining traction.

If it can do that in the coming months, things could get interesting quickly. For investors looking to get in on what could be the ground floor of a recovery rally, this is what it can often look like.

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