Lululemon is Tuesday's IBD Stock Of The Day, as the athleisure brand looked to bounce off its 50-day moving average and gain ground for January, after giving bullish fourth-quarter guidance earlier this month. LULU stock edged down a fraction Tuesday.
Lululemon is a yoga-inspired, technical athletic apparel maker and retailer with men's and women's clothing that it calls athleisure wear. Chip Wilson founded the company in the late 1990s, with a single store in 2000.
In July 2007, LULU stock went public with an initial public offering of 18.2 million shares at $18, raising $327.6 million. On July 30, the first day Lululemon traded on the New York Stock Exchange, shares closed at 29.98. The company executed one two-for-one stock split in 2011.
Lululemon currently competes with sports sector titans Nike, Adidas, Under Armour and others.
On Jan. 8, Lululemon announced it expects Q4 revenue to be in the range of $3.170 billion-$3.190 billion, up from the previous guidance range of $3.135 billion-$3.170 billion.
LULU also forecast diluted earnings per share to be $4.96-$5.00 per share in Q4. The company's prior expectation was EPS of $4.85-$4.93.
Lululemon Stock Performance
LULU stock dipped a fraction to 481.97 during Tuesday's market action, as shares attempted to bounce off its almost converged 50-day and 21-day exponential moving averages.
Aggressive investors could use Tuesday's high of 491.30, which happens to match the stock's 10-week line, as an early entry. LULU stock's current pattern points to a flat base with an official 516.39 buy point being completed at the end of this week.
LULU stock has declined more than 5% in January after surging about 60% in 2023.
On Jan. 22, HSBC downgraded LULU stock to hold from a buy rating but kept its price target at 500. The firm believes the sporting goods sector could face challenges in the first half of 2024 but will see improvements in the second half. HSBC cited valuation for the downgrade of Lululemon after its 60% run in 2023.
This comes after Wedbush analyst Tom Nikic wrote the firm remains "bullish" on LULU stock following the guidance update earlier this month.
"We believe brand momentum remains very high, and LULU is one of the highest-quality names in our coverage," Nikic wrote.
The analyst added that investors have to pay a healthy premium for LULU stock but that the firm believes "it is worth it given the company's high-visibility growth and exceptionally strong execution."
Lululemon stock has a perfect 99 Composite Rating. LULU also has an 89 Relative Strength Rating and a 98 EPS Rating.
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