Lululemon (LULU) shares are in the spotlight on Thursday after a senior Truist analyst warned the path to least resistance is lower in the near to medium term.
In his research note this morning, Joseph Civello downgraded LULU to “Sell,” and lowered his price target on the athletic apparel company to $94, indicating potential downside of another 21% from here.
Civello’s bearish call is particularly significant given Lululemon stock is already down nearly 45% versus the start of this year.
Why Truist Favors Unloading Lululemon Stock
Truist recommends parting ways with LULU shares due to evidence that the company is losing its grip on consumer interest.
According to its analyst, search trends across both Google and TikTok indicate a significant decline in customer mindshare, reinforcing that the brand is losing momentum to rising athletic-wear rivals
Additionally, proprietary credit card data also confirms that transaction volumes remain materially subdued, he added.
Note that Barchart currently holds an “88% SELL” opinion on Lululemon Athletica, which means technical momentum also currently signals continued downside ahead.
Margin Contraction Could Hurt LULU Shares
In his research report, Civello also cited “recent PR missteps” and negative sentiment across social platforms as signs of Lululemon’s premium image beginning to fracture in its core North American market.
The Canadian company generates a significant chunk of its sales from China, which makes it even less attractive to own.
According to the Truist analyst, advertising spend will continue to hurt LULU’s operating margins, which is why he lowered his estimates for both fiscal 2026 and fiscal 2027 today.
All in all, Lululemon faces structural challenges, including a sensitive leadership transition period with a new CEO set to take the helm in September, that Wall Street has yet to fully price in.
How Wall Street Recommends Playing Lululemon Athletica
While note as bearish as Truist, other Wall Street firms are not particularly bullish on LULU stock either for the remainder of 2026.
The consensus rating on Lululemon Athletica Inc sits at “Hold” only with the mean price objective of about $123 no longer indicating significant upside potential from current levels.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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