UPDATE: Stifel Lowers PT on Lululemon as Product Quality Remains Inflexible

In a note published Friday, Stifel analyst Jim Duffy maintained a Buy rating and lowered the price target on Lululemon Athletica Inc.

from $85.00 to $80.00 and decreased FY2013 and FY2015 earnings estimates. Duffy noted a deceleration from Q2 to Q3 in part due to three week shipment delays of their fall product and “heightened quality specification and associated changes to product specs and production processes are impeding throughput in factories causing delays in inventory flow which is expected to continue into FY4Q. The analyst reported a decrease in FY2013 earnings estimates from 2.72 to 2.50 and FY2014 earnings estimates from 2.72 to 2.50. Stifel commented that sales and inventory will be heavily based on quality this quarter and will continue to impact 1H14 margins. Duffy wrote, “while our checks have shown frequent incidence of stock-outs on core pant styles suggesting supply remains too tight for demand, comp deceleration coincidental with deceleration noted across the retail landscape suggests lululemon is no longer transcending the environment.” LULU closed at $65.29 on Thursday.