LULU Hit With Bear Notes Ahead of Earnings

Two analysts cut their price targets on LULU

Deputy Editor
Mar 29, 2021 at 3:09 PM
facebook twitter linkedin


The shares of Lululemon Athletica Inc (NASDAQ:LULU) have been in a rut for the better part of March, trading in a narrow channel contained by the $300 and $320 levels. This upper level has served as a ceiling since late-February, and continues to elude the equity during its pre-earnings session, in which it was last seen down 0.2% at $313.48. LULU is expected to report earnings after the close tomorrow, March 30. 

A further analysis of LULU's technical troubles shows the 40-day moving average keeping a lid on shares for the better part of 2021, guiding the stock to a near 10% year-to-date loss. There still looks to be support at the 320-day moving average, however, and year-over-year, the apparel name boasts a 66% lead. 

The equity could be facing some headwinds from the brokerage bunch, too. Today, Deutsche Bank slashed its target price to $396 from $400, and yesterday Piper Sandler cut its estimate to $478 from $490. This puts the 12-month price target at $402.45, which is a 27.9% premium to current levels. Meanwhile, 17 of the analysts covering the stock call it a "buy" or better, while eight say "hold."

Sentiment has been unusually bearish at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where 1.06 puts have been picked up for every call -- a ratio that stands in the high 85th percentile of its annual range. 

There may be a historical reason for some of this pre-earnings negativity. LULU was in the red after its past five earnings reports. Its three post-earnings moves prior, the stock saw positive returns, averaging a swing of 6.5% during these past two years, regardless of direction. This time around, the options pits are pricing in a slightly bigger move of 9.7%. 

Trader: Sell These 8 Stocks in 2021

1633101108

 




 
Special Offers from Schaeffer's Trading Partners