Athletic apparel maker Lululemon (LULU) may be trying to find its way right now, but tell that to investors, who are scooping it up today despite an analyst downgrade yesterday.
Christian Science Monitor/Getty We note that the stock inched up 0.8% at 3:03 p.m. today, the same day the folks over at Motley Fool asked, "Is Lululemon Too Hated Right Now?" and just a day after one analyst weighed in on the company with less-than-stellar sentiments.
To rewind, the company has had a few bumps and scrapes over the past few quarters following several PR disasters involving its products and an off the cuff remark by founder Chip Wilson that left women reeling and sent him packing. Shares of Lululemon fell 23% in 2013.
The pain has continued this year–and so have the downgrades. On Jan. 20, Sam Poser of Sterne, Agee & Leach lowered estimates and cut the price target to $43 from $47 and yesterday, Adrienne Tennant of Janney downgraded Lululemon to Neutral from Buy and lowered the fair value estimate to $49 from $61.
Tennant didn't mince words when she reversed sentiment:
Simply put, we were early, and wrong, on becoming more constructive on shares of Lululemon late 2013. We are moving to the sidelines and downgrading shares of Lululemon to Neutral from Buy and removing from our Best Ideas list.
However, Tennant hasn’t completely given up hope on the company:
Despite the product quality and supplychain issues experienced this year, we continue to have confidence in the strength of lululemon's brand in the longer-term and the loyal customer base.
At least someone does.
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