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NEW YORK (TheStreet) - For a company that once had so much momentum behind it, the growing number of mishaps at lululemon athletica (LULU) - Get Lululemon Athletica Inc Report doesn't bode well for its stock, and analysts are becoming concerned.

Sterne Agee analyst Sam Poser downgraded the yoga and athletic apparel company's stock to "underperform" from "market perform" on Thursday saying the company is "alienating its customer."

"The current valuation of over 27 x 2014 earnings is not sustainable as the company is alienating the customer," Poser writes in a research note. "Recent comments from LULU's Chairman/founder, on top of shear and pilling problems, and the ongoing search for a new CEO lead us to the aforementioned conclusion. We see little risk to current trends but expect SSS deceleration" in 2014.

Poser lowered his 2014 earnings estimates by 16 cents to $2.33 and same-store sales estimates to 6% from 8% growth. He established a $56 price target.

"We believe the care afforded to product quality, innovation, and customer care, which allowed for sales/SqFt of over $2,000 and approximately 25% EBIT margins, has dissipated," Poser adds.

Lululemon continues to have a rough year that is starting to affect the brand. From having to recall pants in March over complaints about sheerness to the surprise resignation announcement by CEO Christine Day in June to more recent complaints about sheerness and pilling on the expensive pants.

But the icing on the cake was founder Chip Wilson's insensitive comments blaming women's bodies for the pilling occurring on yoga pants. "Quite frankly, some women's bodies just actually don't work for it," he told Bloomberg last week.

Shares were trading 4% lower after market open to $66.20 on Thursday. The stock is down 9.5% this year, compared chief rival Under Armour (UA) - Get Under Armour, Inc. Class C Report, whose shares have risen 70% this year. Shares of Nike (NKE) - Get NIKE, Inc. Class B Report and Columbia Sportswear (COLM) - Get Columbia Sportswear Company Report that also play in the active wear space have risen 52% and 29%, respectively this year.

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"LULU's missteps may open the door for Nike, Under Armour and L Brand's (LTD) Victoria's Secret: All three are increasing focus on LULU's categories and bring tougher competition than LULU is used to," Morgan Stanley analyst Kimberly Greenberger writes in a Nov. 14 note. "The bear case is rivals pressure LULU's 25% EBIT margins more than expected, causing meaningful P/E contraction given 74% of LULU's price is based upon post-2015 growth."

At least one analyst still takes a bull case on lululemon. JPMorgan Chase analysts Brian Tunik and Kate Fitzsimmons initiated coverage on the stock on Wednesday with an "overweight" rating.

"The Lulu story is evolving from a double-digit comp and North American unit expansion story to one of a slightly more mature, global growth retailer," the analysts wrote.

"We believe that the shares of Lulu deserve a premium valuation given its niche, premium positioning, top- and bottom-line growth potential, strong margins, and now, margin recovery story," the note said.

Still Sterne Agee's Poser makes a good bear case for the stock.

"Our new price target of $56 equals 24x our revised FY14 EPS estimate of $2.33. Over the past five years LULU has traded at an average PE of 30X the out year earnings. We continue to expect high teens store growth but the industry-leading sales/square foot is likely fleeting," Poser writes.

"The product problems, the lack of leadership, and the mouth of the chairman will likely continue to alienate existing customers, making it tough to attract new customers. We have thought LULU has been walking a tightrope for months, and now we believe it will fall off," he says.

Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.