UPDATE: Sterne Agee Downgrades Lululemon Athletica Following Signs of Leadership Alienating Customer Base

In a report published Thursday, Sterne Agee analyst Sam Poser downgraded Lululemon Athletica

from Buy to Underperform and moved the price target to $56.00. In the report, Sterne Agee said, "The current valuation of over 27X 2014E is not sustainable as the company is alienating the customer. Recent comments from LULU's Chairman/founder, on top of shear and pilling problems, and the ongoing search for a new CEO lead us to the aforementioned conclusion. We see little risk to current trends but expect SSS deceleration in '14. Lowering 2014 EPS and SSS estimates from $2.49 and +8.2% to $2.33 and +6%. We are establishing a $56 PT." Lululemon closed on Wednesday at $68.98.