Lulu stock rose 0.4% in premarket trading Thursday even after Evercore cut its price target to $130 from $175 ahead of Lululemon’s first-quarter earnings report. The firm kept an In Line rating and said the potential for a “big reset” to the FY26 outlook overrides an “attractive valuation.”
That call lands while the stock is already down 4% this week, leaving investors with a tighter gap between near-term earnings expectations and a larger reset risk. Wall Street expects first-quarter revenue of $2.37 billion and EPS of $2.60, a setup that points to another quarter of weak growth before management can show progress on its turnaround plans.
Evercore trims LULU to $130
Evercore’s new $130 target implies only 3% upside from current levels, a sharp reset from the prior $175 mark. The move signals that valuation alone is not enough to carry the name into earnings if fiscal 2026 expectations get reset lower.
The downgrade comes just before Lululemon reports first-quarter results, when the market will test whether the company can defend its numbers while investors are already bracing for revenue that is expected to come in slightly below last year and earnings that are expected to be flat year over year.
March comments and sales mix
Meghan Frank said in March that the company was in the middle of restoring the full-price health of its brand. Lululemon said it is trying to get there by launching more new products, reducing markdowns and managing inventory, and it expects new items to make up 35% of its assortment in 2026, up from 23% in 2025.
Those changes matter because they point to a business that is still in transition, not one that has already locked in a clean recovery. Lululemon also expects positive full-price sales growth in North America to begin in the second quarter and continue in the second half of the year.
China and the board deal
China Mainland revenue is expected to grow 20% this year, while the remainder of the international business is expected to rise at a mid-teens rate. Lululemon said it has seen strength in markets including China and South Korea, giving the company one growth lane even as the broader earnings setup stays soft.
The company also agreed to appoint two of Chip Wilson’s nominees to its board and add a third director by Oct. 1, while Wilson agreed to refrain from publicly criticizing Lululemon for 18 months. That settlement removes a distraction ahead of Heidi O’Neill’s arrival as CEO in September, and it leaves the next earnings print as the cleaner test of whether the brand can turn better sales mix into better numbers.
