Analyst Downgrades: Lululemon Athletica inc., Nike Inc, and Under Armour Inc

Analysts downwardly revised their ratings and price targets on Lululemon Athletica inc. (LULU), Nike Inc (NKE), and Under Armour Inc (UA)

Oct 31, 2016 at 9:20 AM
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Analysts are weighing in on apparel stocks Lululemon Athletica inc. (NASDAQ:LULU)Nike Inc (NYSE:NKE), and Under Armour Inc (NYSE:UA). Here's a quick roundup of today's bearish brokerage notes on LULU, NKE, and UA.

  • Nomura slashed its target price on LULU to $65 from $75, even after the retail stock popped over 2% Friday to settle at $58.40. Since peaking in late August near $82, though, the shares have shed 28.6% of their value. As might be expected, short interest on Lululemon Athletica inc. is considerable. At present, 16.5% of the stock's float is sold short, and at LULU's average trading volume, it would take nearly seven sessions to cover these bearish bets.
  • NKE is down 2% pre-market, after BofA-Merrill Lynch downgraded its rating to "underperform," and cut its price target by $10 to $46 -- an 11.6% discount to Friday's settlement at $52.02. All in all, it's been a miserable year for Nike Inc shares, which have surrendered nearly 17% of their value and touched an annual low of $50.71 last week. Yet, options traders have struck a pretty bullish pose toward the stock, buying to open 1.64 NKE calls for every put during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The corresponding call/put volume ratio outstrips nearly 70% of all others from the previous year.
  • Things just keep getting worse for UA, which is down 18.4% in the four sessions since the company reported earnings, at $30.94. Last week, in fact, the stock touched a two-year low of $30.63. Not surprisingly, analysts have been throwing in the towel on Under Armour Inc, and most recently, Nomura slashed its price target to $31 from $38. Additional bearish brokerage notes could be forthcoming, too, considering 12 analysts still maintain a "strong buy" rating on the underperformer.
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