Shares of Lululemon Athletica ( LULU) were sinking over 1% during Tuesday morning trading following a downgrade of the athleisure retailer at Stifel to "Hold" from "Buy" with a $66 price target.

Stifel analyst Jim Duffy noted to clients that the stock's current risk/reward ratio is now balanced following the recent run-up in valuation.

Despite the cautious outlook on valuation, he appreciates its authenticity, its tightly controlled distribution, and its global growth prospects. Duffy suggests that Lululemon is well positioned to profit from long duration secular trends and structural tailwinds.

His full-year 2017 earnings per share estimate remains at $2.33, and his full-year 2018 estimate remains at $2.67 per share.

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