Rallying LULU Stock Attracts More Bullish Analyst Attention

Lululemon could have more fuel left in the tank, too, from a contrarian perspective

Dec 27, 2017 at 10:10 AM
facebook twitter linkedin

A number of retail stocks have found new life toward the end of 2017, including Lululemon Athletica Inc. (NASDAQ:LULU). The shares enjoyed their highest close in over a year yesterday, thanks to their strong push up the charts in the second half of the year. By the numbers, LULU stock has surged 67.5% since the end of May, with a solid chunk of these gains coming after an impressive earnings release earlier this month. In fact, Lululemon stock is pacing for its best quarter since early 2016, up nearly 27%. Meanwhile, analysts keep upping their outlooks.

lulu stock

Just this morning, BofA-Merrill Lynch upped its price target to $89 from $80 -- in uncharted territory -- citing strong holiday sales from its store checks. This comes a week after BMO lifted its price target on the equity to $75 from $64. Ten brokerage firms still have just "hold" ratings in place, however, so there's room for even more bullish attention to come the stock's way.

Interestingly, near-term options traders are displaying bearish tendencies, as well. This is according to Lululemon Athletica's Schaeffer's put/call open interest ratio (SOIR) of 1.60, which ranks just 2 percentage points from a 52-week high. Not only does this mean put open interest easily outweighs call open interest among options expiring within three months, but it shows such a put-skew is very unusual.

An unwinding of bearish options could help fuel more gains for the shares, though. And anyone looking to buy short-term options can do so for an apparent bargain at the moment. That's because the retail stock's Schaeffer's Volatility Index (SVI) of 32% ranks in just the 11st annual percentile, signaling relatively muted volatility expectations.


Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!