

What: Shares of lululemon athletica (NASDAQ:LULU) slipped slightly this morning after Wedbush downgraded the yoga gear retailer from outperform to neutral.

So what: Along with the downgrade, analyst Corinna Freedman lowered her price target to $40 (from $64), representing about 7% worth of upside to yesterday's close. So while momentum traders might be attracted to Lululemon's sharp earnings-related pullback yesterday, Freedman's call could reflect a sense on Wall Street that the company's growth prospects are just too limited to trigger a significant rebound.

Now what: According to Wedbush, Lululemon's risk/reward trade-off is pretty balanced at this point. "LULU beat our top-line estimate by $7.4m, beat our comp expectation by 50 bps, beat our GM assumption by 40 bps and beat our EPS estimate by 1c, which validated our improved outlook during the Q based on our channel checks," Freedman noted. "This was overshadowed by yet another trim to FY guidance and complicated further by a sequential slowdown in comps, which erodes our confidence in guidance that we previously viewed as a sufficiently low bar." Of course, with Lululemon shares now off more than 50% from their 52-week high and trading at a PEG just above 1, those near-term concerns might provide patient Fools with a solid long-term opportunity.