Lululemon, Docusign And 3 Stocks To Watch Heading Into Friday

UiPath shares fell 7.7% after reporting mixed Q2 results while raising FY27 sales guidance. Lululemon dropped 18.2% after cutting full-year revenue outlook to $10.35B–$10.50B and earnings to $9.48–$9.73 vs $11.04B revenue and $10.96 EPS estimates, while Planet Labs missed on losses (-$0.03 vs -$0.02) but beat revenue ($116.05M vs $104.12M) and AOUT jumped 25.5% on better-than-expected Q1 FY27 results. Zscaler and DocuSign posted upside surprises with Zscaler’s strong FY27 guidance (shares down 2.1%) and DocuSign shares up 3.8% after raising FY27 revenue outlook.

Analysis

LULU is the clearest loser because the problem is not one quarter of noise; it is a reset in the market’s implied growth path. When a premium consumer brand cuts revenue and EPS this hard, the second-order effect is multiple compression across high-end athleticwear and specialty retail, plus likely inventory-clearing pressure that can spill into peers through markdowns over the next 1-2 quarters.

In software, the market is telling us that “beat + raise” is no longer enough if the growth vector is not visibly accelerating. ZS can still compound, but the flat/negative reaction suggests the stock needs billings and large-deal momentum to justify the multiple; without that, upside is capped even after a strong print. PATH’s raised out-year sales target is too distant to matter unless near-term bookings improve, while DOCU looks comparatively cleaner because self-funding cash flow can attract capital rotating out of lower-conviction growth names.

Contrarian view: the selloff in LULU may be more about valuation reset than brand decay, so a reflexive bounce is possible if management merely stabilizes guidance and inventories. The bigger underappreciated risk is that the software winners are being treated as “okay to own” rather than “must own”; if macro stays choppy, ZS and PATH can underperform for months even after beats because the market will demand proof, not promises.

Key Decisions for Investors

• Short LULU on any post-earnings bounce or via a 1-3 month put spread; thesis is continued estimate cuts and multiple compression. Falsify if management stabilizes FY outlook and same-store/inventory trends improve into the next update.
• Pair trade: long DOCU / short PATH for 1-3 months. DOCU has the better cash-flow durability and near-term rerating potential; PATH still looks like a long-dated story until bookings/AI monetization inflect. Stop if PATH shows a material bookings acceleration or DOCU re-guides down.
• Avoid chasing ZS after the after-hours reaction; if you want exposure, use a starter long only on a pullback with a 6-12 month horizon. The stock needs billings/RPO confirmation to expand from here; absent that, treat it as range-bound.