NEW YORK (TheStreet) -- Shares of Lululemon Athletica Inc. (LULU) are lower by 2.63% to $44 in pre-market trading on Friday, following a ratings downgrade to "underperform" from "neutral" at Sterne Agee.
The firm said it reduced its rating on the athletic apparel designer and retailer based on its belief the brand has been damaged due to the issues it was having in 2013, as well as an "uninspiring tenure" by the company's new CEO.
Sterne Agee said it's difficult for the company to regain its lost customers, especially when other retailers have increased their focus on women's apparel.
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The firm set a $39 price target on Lululemon stock.
"Many investors who believe in the potential of Lululemon are focused on the product and the potential for improvement. We have no doubt the product will improve, but believe it is too little, too late," the firm said.
Separately, TheStreet Ratings team rates LULULEMON ATHLETICA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate LULULEMON ATHLETICA INC (LULU) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."