Lululemon Athletica shares rose 0.4% in premarket trading on Thursday as investors awaited the company’s first-quarter results, even after Evercore ISI cut its price target on LULU to $130 from $175 and kept an In Line rating.
Wall Street expected first-quarter revenue of $2.37 billion and earnings per share of $2.60, with Koyfin data showing that consensus revenue would be down from $2.4 billion a year earlier and below $3.64 billion in the previous quarter. Analysts also penciled in $553 million of EBITDA for the quarter — figures that set a narrow margin for upside when the company reports.
The move by Evercore carries weight because the firm said the possibility of a “big reset” to fiscal 2026 forecasts outweighs what it called an otherwise attractive valuation. That warning landed this week as LULU stock had already fallen about 4% so far in the week, leaving traders to balance near-term earnings with the risk of a downgrade to longer-term expectations.
Lululemon has been explicit about the levers it thinks will restore growth. Management told investors in March it is pushing new products, cutting markdowns and managing inventory to revive full-price sales — a program the company says is already underway. “We are in the middle of restoring the full-price health of our brand,” Meghan Frank said on the call.
Company forecasts in recent communications underscore the plan: Lululemon expects positive full-price sales growth in North America to begin in the second quarter and to continue through the second half of the year. It also expects new items to make up 35% of the assortment in 2026, up from 23% in 2025. Internationally, the firm projects China Mainland revenue to grow about 20% this year while the remainder of its international business should rise at a mid-teens rate.
Corporate governance developments have added another layer to investor attention. Last week Lululemon agreed to appoint two of founder Chip Wilson’s nominees to the board and to add a third director by Oct. 1, while Wilson agreed to refrain from publicly criticizing the company for 18 months. The settlement arrives ahead of Heidi O’Neill’s scheduled arrival as CEO in September.
The immediate tension for investors is how those turnaround efforts square with Evercore’s caution. Cutting the target to $130 from $175 signals that some analysts see limited runway under current assumptions unless management can demonstrate sustained margin recovery or issue guidance that preserves the company’s premium multiple.
What matters next is straightforward: Lululemon’s first-quarter report and any accompanying guidance for 2026. Investors will watch whether management can translate product and inventory moves into clear revenue and margin trajectories — and whether the company pushes back on, or confirms, the idea that a material FY26 reset is required. The answer in the results will determine whether the stock’s modest premarket gain holds or whether the valuation gap Evercore highlighted widens into a more damaging re-set.
