HSBC Downgrades lululemon athletica (LULU) Stock to Hold

Core Viewpoint - Lululemon athletica inc. is facing challenges in its U.S. business, leading to a downgrade by HSBC from "Buy" to "Hold" with a reduced price target of $175 from $275 [1][2] Financial Performance - In Q2 2025, Lululemon exceeded EPS expectations but fell short on revenue guidance primarily due to its U.S. operations [2] - For Q3 2025, the company anticipates net revenue between $2.470 billion and $2.500 billion, indicating a growth of 3% to 4% [2] - The expected diluted EPS for Q3 2025 is projected to be between $2.18 and $2.23 [2] Market Position and Competition - Despite increased competition from brands like Vuori, Alo, and Fabletics, Lululemon continues to maintain its relevance and strong performance [3] - The competitive landscape has seen these upstart brands gaining market share primarily from Nike, which is experiencing negative topline growth [3] - Lululemon's proprietary fabrics provide a quality advantage, keeping it core to the wardrobes of many consumers, even amidst rising competition [3]