Lululemon stock price forecast after the strong Q2 earnings

The Lululemon (NASDAQ: LULU) stock price skyrocketed in extended hours as investors reacted to the relatively positive quarterly results by the Canadian company. The stock rose by more than 13% to an all-time high of $432.

Lululemon earnings

Lululemon Athletica is a leading Canadian company valued at more than $50 billion. The company runs hundreds of retail outlets and an e-commerce platform that provides quality athleisure products like sports bras and jogging pants.

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In the past few years, athleisure has become one of the fastest-growing areas in retail. Indeed, many top companies like Gap, Nike, and Adidas have all invested heavily in the industry. As a result, due to its market-leading brand, Lululemon is one of the most expensive retail stocks in the world. The firm has a forward PE ratio of 57, which is higher than Adidas’ 37 and the S&P 500 average of about 40.

The Lululemon stock price got pricier in the overnight session after the company published strong quarterly results. It’s total revenue in stores grew by 142% in the second quarter while its e-cigarette comps rose by 4%. Precisely, its revenue rose by 61% to $1.5 billion. E-commerce represented about $597 million of the total revenue. 

Most importantly, the company has already reopened about 95% of all its stores while its gross and operating margins increased. Also, the firm upgraded its forward guidance for the third quarter. It expects its revenue to be between $1.4 billion and $1.43 billion. 

So, is the Lululemon stock a buy? According to Webull, Lululemon is tracked by 34 Wall Street analysts. Among these, more than 70% have a buy and strong buy rating on the stock. The remaining analysts have a hold rating, meaning that they expect the performance to improve. The average forecast for the LULU stock is $405, which is slightly lower than its current level. 

Lululemon stock price analysis

The four-hour chart shows that the LULU stock popped after the company published strong quarterly results. The shares rose to an all-time high and crossed the previous double-top level of $415. Along the way, the stock jumped above the 25-day and 50-day exponential moving averages (EMA). 

Therefore, this jump has invalidated the bearish case that was presented by the double-top pattern. Thus, there is a likelihood that the shares will maintain the bullish trend as investors eye the key resistance at $500.

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