Trading Lululemon’s Raised Earnings Outlook

September 05, 2022 20:04

As investors fear the potential of a recession from aggressive interest rate hikes from central banks all around the world, companies that are providing a positive outlook for the rest of the year have attracted much more attention.  

Athletic apparel retailer Lululemon is one such stock. In its latest quarterly earnings report, the company raised its outlook for the year. However, the share price is still down around 19% from the beginning of the year.  

In this article, we explore the recent Lululemon earnings report.

Stock: Lululemon Athletica
Symbol for Invest.MT5 Account: LULU
Date of Idea: 6 Sept 2022
Time Line: 1 - 6 months
Entry Level: $330.00
Target Level: $475.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Lululemon’s Quarterly  Earnings Report

In Lululemon’s second quarter fiscal 2022 results, the company posted stronger than expected revenue and earnings. Revenue increased 29% to $1.9 billion while earnings per share came in at $2.20 which was above Wall Street expectations of $1.87.  

While inflation impacts consumer spending, Lululemon’s same-store sales grew 23% beating analyst expectations of 17.6%. The company also bucked the trend which has seen other retailers lower their outlook for the current quarter.  

Lululemon actually raised its outlook for the year. Chief Financial Officer Meghan Frank stated that traffic in stores and e-commerce traffic remains robust even through the challenging macro-environment.  

The traffic increases were not down to any promotional campaigns with the management team stating that they remain a “predominantly full-price business.” 

The company is launching a new membership program which has a free tier and a $39 per month tier which gives members invitations to in-person events, and early access to new products and exclusive items.  

However, can Lululemon really buck the trend being seen with other retailers? Many have provided a negative outlook for the current quarter due to a potential slowdown in demand which will also likely affect Lululemon.  

It’s important to take into consideration any macroeconomic issues as these can also weigh on a company’s share price. 

Lululemon Stock Forecast - What do the Analysts Say? 

According to analysts polled by TipRanks for a Lululemon stock forecast in the past 3 months, there are currently 16 buy, 5 holds and 1 sell ratings on the stock. The highest price level for a Lululemon stock forecast is $512.00 with the lowest price target at $200.00. 

The average price target for a Lululemon stock forecast is $379.89 which represents more than 20% upside from current levels, at the time of writing.   

Source: TipRanks, 6 Sept 2022 

An Example Trading Idea for the Lululemon Stock Price

An example trading idea for the Lululemon share price could be as follows:  

  • Buy the stock above $330.00 to allow for current market volatility. 
  • Target just below the all-time high at $475.00. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 Lululemon shares:  
    • If target is reached = $1,450.00 potential profit ($475.00 - $330.00 *10 shares). 

Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering the recent sell-off in global stock markets.  

Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.  

With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in Lululemon would result in a commission of $0.20 ($0.02 * 10 shares).  

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy Lululemon Stock in 4 Steps  

With Admirals, you can buy shares in companies like Lululemon with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the Trader’s Room.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.   
  4. Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.   

Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance. 

Click on the banner below to buy Lululemon stock today! ▼▼▼ 

Do You See the Lululemon Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance Lululemon's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article. 


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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.