Wednesday’s analyst upgrades and downgrades

Wednesday’s analyst upgrades and downgrades DAVID LEEDER PUBLISHED 2 HOURS AGO UPDATED 21 MINUTES AGO COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. Inside the Market’s roundup of some of today’s key analyst actions Citi analyst Paul Lejuez thinks the near-term risk/reward proposition for Lululemon Athletica Inc. (LULU-Q +2.56% increase ) “looks slightly more favorable” following an 18-per-cent drop in its share price since the release of its quarterly results on Sept. 3, and he believes the Vancouver-based clothing retailer can beat its third-quarter guidance “which was guided very conservatively.” However, he warns investors the outlook for the next fiscal year and beyond “remains very unclear.” New Lululemon CEO faces compounding pressures as she takes over top job “Our concern is that sales pressure may continue into F27, and the size of its store fleet may need to be addressed (following years of store expansions) to avoid significant cost deleverage on sales/sq ft declines,” said Mr. Lejuez. In a client note reviewing last week’s quarterly release, which featured a reduction to the forecast for its financial performance in the year ahead for the second time in just three months, he lowered his full-year fiscal 2026 and 2027 earnings per share projections to US$10.49 and US$8.89, respectively, from US$11.12 and US$9.99. “Our F26/F27 sales estimates were lowered from down 0.6 per cent/up 3.5 per cent to down 4.4 per cent/up 0.7 per cent with F26/F27 comps moving from down 5.7 per cent/down 0.5 per cent to down 10.0 per cent/down 3.6 per cent and F26/F27 EBIT margin estimates moving from 15.8 per cent/12.5 per cent to 15.3 per cent/11.7 per cent,” he added. “Despite our lower estimates, we believe 3Q guidance was cut sufficiently (very conservatively in fact). Our 3Q26 EPS est is $1.51 vs guidance of $0.93-0.98 and consensus of $0.98.” With those changes, Mr. Lejuez reduced his target for Lululemon shares to US$117 from US$130, keeping a “neutral” rating. The average target is US$103.37. “After years of benefitting from outsized growth in active apparel, trends in the category have slowed,” he said. “This dynamic, coupled with LULU’s execution issues (lacklustre product assortment/lack of color/sizing) leave LULU more susceptible to increased competition and promotional pressures. Mgmt plans to add more newness to help improve the Americas biz (which…