Lululemon Athletica (LULU) is expected to cut its fiscal 2026 earnings per share outlook due to weaker US and China sales, UBS Securities said in a note Tuesday.

The company is scheduled to report fiscal Q2 results on Sept. 3.

The analysts said they project Lululemon to lower its fiscal 2026 earnings per share guidance by about $1.25 to $9.70 to $9.90, driven by weaker China and US sales growth. This would be below the $10.93 Street estimate and the market's expected $10.20 to $10.40 bar.

They added that they also do not expect major changes to the company's US action plan, as the new chief executive officer starts just one week after the fiscal Q2 results.

The analysts said they see limited upside to Lululemon's US and international business outlook from the fiscal Q2 results. "However, we note Lululemon sentiment already leans bearish and thus likely limits price-to-earnings downside. This is why we see only a moderately tilted upside/downside skew around the event."

The options market is pricing in a 9.9% move in either direction following fiscal Q2 EPS, compared with a 9.5% historical average, the analysts said, adding that they expect the actual move to be smaller than 9.9%.

UBS lowered its price target to $120 from $124 and kept its neutral rating.

Price: 117.50, Change: -5.29, Percent Change: -4.30