Lululemon (LULU.US), Under Armour (UAA.US) shares fell 3.95% and 4.50% respectively on Monday after Jefferies downgraded both apparel makers.
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Lululemon's rating was lowered to “underperform” from “hold,” due to rising competition and an easing of the COVID-related spike in demand.
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“LULU is facing rising competition from companies such as Alo, Athleta, Rhone, Vuori, and others. In what is now an ever-crowding space, we are skeptical of LULU's ability to grow as quickly,” according to analyst Randal Konik.
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Under Armour stock was downgraded to “hold” from “buy” and price target was lowered to $10 from $20 on concerns about management volatility and lagging fundamentals.
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“We believe Under Armour performance could lag peers' top-line growth and EBIT margins ahead, while management volatility clouds visibility.” Konik said.
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Jefferies expects solid performance from Nike (NKE.US) as the “clear leader in the highly fragmented athletic/athleisure apparel and footwear market”. Nike kept the Buy rating with a $155 price target.
Lululemon (LULU.US), Under Armour (UAA.US) both took a massive hit in recent months. Lululemon (red and green candles) is currently testing its pre-pandemic high, while Under Armour (blue candles) is approaching lows from 2020. Source: xStation5
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