Morgan Stanley cautious on Lululemon while BofA sees upside on stock

Investing.com --Analysts struck differing tones on Lululemon Athletica ahead of second-quarter results, with Morgan Stanley warning that slowing North American sales could weigh on earnings while Bank of America called the stock’s recent selloff a buying opportunity.

Morgan Stanley, which kept an Equal-weight rating and cut its price target to $223, said it expects the apparel maker to miss Wall Street’s earnings estimates as U.S. sales trends weaken and management trims full-year guidance due to tariffs.

The brokerage forecast second-quarter earnings of $2.80 a share, below consensus, and said it does not see a near-term rebound in the Americas business.

“In our view the NTM risk-reward still skews to the upside on a closer-than-farther away Americas rate-of-change-story, though material valuation re-rating feels unlikely even with an inflection,” analyst at MS said.

While Bank of America reiterated a Buy rating, though it lowered its price objective to $300 from $370.

It said Lululemon’s valuation at less than 12 times 2026 earnings was at historic lows and presented an attractive entry point.

BofA said execution on 7-8% sales growth in the second quarter and stabilization in China and international markets could help the stock re-rate higher.

Lululemon shares have fallen about 40% since June over investors concerns on ability to reignite growth in North America, once its strongest market.

“We think the stock’s selloff presents a particularly good opportunity to own a strong growth company with high margins,” analysts at BofA said.