10:59 AM EDT, 08/26/2025 (MT Newswires) -- Lululemon athletica's (LULU) stock could recover from its current lows if the company can deliver fiscal Q2 sales growth of 7% to 8% as guided and maintain similar momentum into H2, BofA Securities said in a note Tuesday.

The analysts said that the stock is currently trading at less than 12 times price-to-earnings based on fiscal year 2026 estimates, which is an all-time low for the company. This suggests the market is anticipating a significant earnings cut.

The athletic apparel maker is set to report fiscal Q2 results on Sept. 4.

Investors are frustrated by the ongoing shifts in management's messaging around the slowdown in the North American business. The most recent explanation pointed to a lack of scale behind successful product innovation, the analysts said, adding that they need to see new data showing that upcoming products are performing well and are substantial enough to turn North American comparable sales positive in H2.

Any signs that China and the rest of the world have stabilized would be well received, the analysts said, adding that they view international markets, which make up about 25% of Lululemon's total sales, as the company's strongest long-term growth opportunity, especially given its relatively low store count outside North America.

"We believe LULU is one of the sales and earnings growth stories in retail with a strong brand, innovative product, and significant international expansion opportunity. We expect solid same-store sales growth to support continued operating margin expansion," the analysts said.

The analysts also said that Lululemon remains relatively well-positioned compared with many other brands to manage through higher tariffs, however, there has been growing investor concern around discounting. The company has guided to a slight increase in promotional activity for fiscal year 2025 in response to macroeconomic pressures. This will likely be a key topic during the Q2 earnings call.

BofA Securities adjusted its price target on Lululemon Athletica ( LULU ) to $300 from $370, while keeping its buy rating.

Price: 201.25, Change: -1.19, Percent Change: -0.59