Analyst Expects Higher Highs for Lululemon Stock

Bearish options traders have been piling on LULU stock in recent weeks

Emma Duncan
May 7, 2018 at 10:11 AM
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Yoga apparel concern Lululemon Athletica Inc. (NASDAQ:LULU) stock is trading higher this morning, after receiving a price-target raise to $104 from $96 from Deutsche Bank -- in uncharted territory. LULU shares are now poised to close back above their 20-day moving average, after pulling back from record highs on Friday. Lululemon stock was up 1% at $96.40, at last check.

The retail stock has been stair-stepping higher for nearly a year, and calls on the equity recently generated a 100% profit in three days for subscribers to Schaeffer's Expiration Week Countdown service. In fact, just last Wednesday, LULU stock soared to a fresh record high of $100.73, and the shares have added roughly 25% in three months.

Nevertheless, options traders have been leaning bearishly in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 1.02, ranking in the 81st annual percentile. This suggests puts have been purchased over calls at a faster-than-usual clip during the past two weeks.

More upbeat analyst attention could be in store for LULU, with the stock's average 12-month price-target coming in at $91.89 -- a discount to current levels, indicating now would be an affordable time for traders to jump onto LULU. Meanwhile, 12 of the 25 analysts following the stock sport tepid "hold" recommendations, leaving the door open for upgrades.


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