Lululemon Pants Recall — from Bad to Worse

We now have seen many analysts cut numbers and some downgrades based on the guidance. These are the research calls we have seen:

• BofA/Merrill Lynch maintained an Underperform rating with a $60 price target.
• Credit Suisse maintained its Neutral rating and $79 target.
• Janney cut to the target to $71 from $80.
• Stifel Nicolaus trimmed its target by $8 down to $75.
• Stern Agee cut the rating to Neutral from Buy.

As far as the financial impact, the yoga-themed retailer expects first quarter same-store sales growth of 5% to 8% versus its prior forecast of 11% and revenue in a range of $333 million to $343 million versus its prior range of $350 million to $355 million.

Lululemon saw shares fall 3.75% on Monday to $65.90, and the drop so far on Tuesday is almost 5% down to $62.75. Its 52-week trading range is $52.20 to $81.09. The consensus from Thomson Reuters has Lululemon trading at 28-times forward 2013 (2014) earnings.