Jefferies slashes Lululemon price target by 20 percent on 'elevated promos'

A customer looks at athletic apparel inside a Lululemon store.
Xaume Olleros | Bloomberg | Getty Images

Jefferies cut its price target for Lululemon by $15 and reiterated its hold rating on the shares, citing the prospect of lower earnings due to increased promotional discounting.

"Web-scrape still shows elevated promos," analyst Randal Konik wrote in a note to clients Friday.

"We've closely monitored the 'We Made Too Much' section of LULU's website and have observed heightened promo activity, which stands to threaten the significant GM [gross margin] expansion expected for 2H [second half] and potentially speaks to softening trends."

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