Is Lululemon Athletica Stock Worth a Lofty Price Tag?

Growth expectations for the retailer remain high

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Lululemon Athletica Inc. (NASDAQ:LULU) launched its Lululemon Studio fitness platform today, which will be available for owners of its Mirror workout devices for $39 per month. The program offers in-app and in-person experiences, which include access to fitness content, product discounts, and early sign-ups to events. Plus, subscribers will be able to attend online classes from studios including AARMY, Y7 Studio, Pure Barre and more, and sign up for discounted in-person classes at physical locations.

Additionally, the athletic apparel concern is launching its Essential membership program for consumers in North America. The membership provides shopping perks, community experiences, a selection of Lululemon Studio content, early access to product drops, as well as receipt-free returns.

Lululemon Athletica stock price has fallen roughly 22% year-to-date, with the $356 region rejecting the security's early September rally. Later that month, the shares lost support from the 60-day moving average, with a new ceiling currently forming at the $310 level. At last check, LULU is down 0.6% at $305.85.

LULU 60 Day

Still, Lululemon is expected to produce some great growth figures in the next couple years. For fiscal 2023, the athleisure business is estimated to see a 26.7% increase in revenues, and a 27% increase in earnings. LULU is also estimated to grow revenues and earnings 14.4% and 15.4%, respectively, for fiscal 2024, which may justify its inflated price tag.

Options look like a an ideal way to speculate on the equity's next move. This is per the LULU's Schaeffer's Volatility Scorecard (SVS) of 78 out of 100, which indicates the stock has consistently realized bigger returns than options traders have priced in the past 12 months.

 

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