The company missed EPS estimates in two out of the last four quarters. The brokerage believes the five main factors, which were behind its upgrade in April, have now reached their logical ends, which subsequently resulted in a 30 percent stick price gain year-to-date.
"While we believe LULU still has ample [opportunity] to grow its top-line and expand op margins, we believe this is now largely factored into the stock. On top of this, we believe the athleisure trend is now starting to peak," the analysts told clients in a research note.
While pointing out considerable growth is ahead for Lululemon, the brokerage thinks that is already reflected in valuation. Therefore, Jefferies thinks both kids and international segments will dilute margins. At the same time, it would not make any big dent in revenue generation.
The brokerage believes the trend in athleisure has started to reach flat terrain. Therefore, the analyst sees slight growth in the upcoming period due to the plethora of players in the space wanting to expand their wallet share.
At time of writing, Lululemon was down 2.13 percent at $66.78.
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