Morgan Stanley Sees Multiple Challenges Ahead for Lululemon Athletica

In a report published Friday, Morgan Stanley analyst Kimberly C. Greenberger reiterated an Equal-Weight rating on

. In the report, Morgan Stanley noted, “Lululemon's unique brand positioning and fashionable product offering have allowed it to dominate the North American athletic yoga apparel category. The key questions for the stock are if LULU can permanently resolve product quality issues and put to rest negative PR before competitors gain traction. International potential is another key question and our international market survey suggests solid potential if LULU can execute. We believe LULU's EPS algorithm has changed. LULU's 18.6x FY15 P/E valuation looks fair given its low teens EPS outlook.” Lululemon Athletica closed on Thursday at $37.25.