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Lululemon Athletica (LULU) - Get Free Report shares slipped nearly 1% to $206.23 Monday after a Citi analyst downgraded the Vancouver athletic-apparel company to neutral from buy.

Analyst Paul Lejuez affirmed his price target at $205.

In a note to investors, Lejuez said the Vancouver company has done "nearly everything right." But he said the market expects results to be "flawless," leaving "little room for disappointment" given that the stock is trading at 22.5 times estimated earnings before interest, taxes, depreciation and amortization.

In addition, Lejuez said he has noticed Lululemon doing promotions above and beyond what he normally sees. As a result, he said, the company's merchandise margins may come in weaker than expected. Lejuez said he sees a more balanced risk/reward at current share levels.

Last month, Lululemon posted better-than-expected earnings results. Earnings of 96 cents per share beat estimates by 7 cents, while revenue of $883.35 million grew 22% year over year and topped estimates by almost $40 million.

Gross margin and operating margin improved from a year earlier, and comparable-store sales surged 11% in the quarter, more than double expectations for 5.2% growth.

Further, management gave a boost to its full-year revenue outlook. The full-year outlook for both sales and earnings came in ahead of consensus expectations. 

The stock was was trading off 1.7% at $204.50 premarket.

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