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Lululemon Athletica shares were off about 1% Wednesday as Morgan Stanley cut its target price for the athleisure company's stock.
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The analysts are relatively bullish about Lululemon's first quarter results, which are slated to be released next Thursday.
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But Morgan Stanley has concerns that the company's growth rates will eventually start to resemble those common among other specialty retailers.
Shares of Lululemon Athletica stumbled as Morgan Stanley cut its target price for the athleisure company.
Morgan Stanley on Wednesday sliced its price target for Lululemon (LULU) stock from $373 to $346, but maintained its bullish “overweight” rating. The analysts’ new target implies nearly 8% upside from Tuesday's close and is still above the average price target near $335 according to Visible Alpha.
The retailer is scheduled to release its first-quarter results next Thursday. If Morgan Stanley’s relatively bullish estimates are on point, “we would view the result as a step in the right direction, though admit it likely wouldn’t quell lingering concerns,” analysts said.
Lululemon shares were recently down about 1%, while the S&P 500 was ticking just a bit higher. (Read Investopedia's full coverage of today's trading here. )The stock is down more than 15% this year but has climbed off year-to-date lows seen in April, rising this month to levels last touched in late March.
Lululemon’s performance may eventually stop outpacing its peers and start to resemble standard growth rates in the specialty retail sector, Morgan Stanley wrote. But in the near-term, Lululemon is poised to weather tariffs relatively well, the analysts said.
Morgan Stanley's estimate for first-quarter earnings per share, $2.69, is ahead of the Street's consensus, according to Visible Alpha data.
Read the original article on Investopedia
