Upbeat Earnings Stoke Lululemon Athletica Stock's Red-Hot Rally

No less than seven analysts raised their price targets

Deputy Editor
Mar 30, 2022 at 9:18 AM
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Lululemon Athletica Inc (NASDAQ:LULU) has returned to the earnings confessional, this time with upbeat 2022 guidance and an earnings beat. The apparel retailer posted $3.37 cents per share for its fourth quarter, which came as a surprise since the company lowered its fourth-quarter outlook back in January. While its revenue fell below analysts' estimates, the company also announced a $1 billion share buyback program. 

The mostly positive news has LULU trading up 6.6% at $366.69 ahead of the bell, set to hit levels not seen since early January. The security has seen plenty of upside in the past couple weeks, staging an impressive rally off its March 15 annual low of $278, and yesterday settling just above the 80-day moving average for the first time this year. LULU now boasts a more than 9% 12-month lead, though it's still sitting below its year-to-date breakeven level. 

Analysts are already pricing in plenty more upside for the security this morning. No less than seven members of the brokerage bunch upped their price targets on LULU -- the highest coming from Cowen and Company all the way to $507. Jefferies, meanwhile, commended LULU's management, but added that "the company has a lot to balance."

The equity's 12-month consensus price target of $425.79 is a healthy 16.1% premium to last night's close, but there's still room for additional bull notes. Coming into today, seven of the 22 analysts covering the stock called it a "hold." or worse. 

There was a shift toward bearish bets ahead of LULU's report. While calls are still outnumbering puts on an overall basis at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio sits in the 88th percentile of its annual range, indicating a healthier-than-usual appetite for puts. 

Adding to this, short-term options traders have been much more put-biased of late. This is per Lululemon stock's Schaeffer's put/call open interest ratio (SOIR) of 1.23, which sits higher than 73% of readings from the past year. 

 




 
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