Momentum, fundamentals and analyst optimism News ad

Lululemon Athletics Inc. NASDAQ: LULU The stock has fallen sharply in recent months, and for good reason. After a tough first half of 2024, stocks ended the year higher impressive rallygaining a solid 70% since August. As we head towards the first couple from Several weeks into the new year, Lululemon’s momentum shows no signs of slowing down.

Lululemon Athletics today

LULU

Lululemon Athletics

$395.47 +2.55 (+0.65%)

As of 01/10/2025 16:00 Eastern

52 week range

$226.01

▼

$491.30

P/E ratio

28.55

Target price

$382.73

Headquartered in Vancouver with a market capitalization of approximately $50 billion, the company has firmly established itself as a leader in the athleisure industry. Known for its yoga pants and premium activewear, Lululemon has built a loyal customer base and expanded its presence. all over the world.

But while the broader market was able to spend much of last year at or near record highs, Lululemon struggled to stay afloat. This is still far from the record. from December 2023but there are reasons to think so it won’t be like that much longer. Let’s jump in.

Why Lululemon’s Core Principles Support Continued Growth

To begin withLululemon’s latest financial results were very stable in recent quarters. The company exceeded expectations with its latest earnings report last month, delivering revenue growth of more than 9% year over year. It was accompanied with clear guidance and management updates on increasing the share repurchase program, one of most bullish signals the company can send to investors.

When executives are willing to put their money where their mouth is, it’s a strong indication that they believe in their stock. underestimated. Investors should expect the stock to continue its upward trajectory as these tailwinds build. Macro factors such as the Fed’s interest rate cuts add to risks for stocks and increase consumer spendingLululemon’s fundamental drivers align well with broader market trends. Accordingly, stocks should benefit from this tailwind.

Analysts Highlight Lululemon’s Undervalued Potential

Based on an incident shared by Lululemon underestimated right now, this year they have received due attention from analysts. Just this week, JPMorgan reaffirmed its outperform rating on Lululemon, citing the company’s strong position in a fast-growing market. Additionally, this week Bernstein upgraded the stock to “outperform” and set target price US$460.

Based on the stock’s close Wednesday night, this indicates a target upside of nearly 20%. Bernstein’s optimism is based on the expected turnaround in the company’s business in America, caused by increase in expenses from consumers with higher incomes. For those of us on the sidelines, this is a compelling argument worth leaning on.

Is Lululemon’s 2024 Rise Justified?

Of course, no investment is without risk, and Lululemon’s rapid growth in the second half of 2024 has not gone unnoticed. In December, Citigroup and Deutsche Bank issued neutral ratings, suggesting they needed further signs of fundamentals to justify the rally.

However, while their concerns are worthwhile, they feel overly cautious in light of the company’s strong earnings performance and optimistic share repurchase plan. With a strong first-quarter earnings report likely to dispel much of that skepticism, investors should expect stocks will continue to catch up with the broader market.

Lululemon’s Tech Setup Drives Further Growth

The last piece of the puzzle to consider is Lululemon’s tech setup. The stock’s Relative Strength Index (RSI) is currently at 63. level that indicates strong momentum without being in overbought territory.

For context, RSI is a widely used indicator that measures the speed and change of price movements, with values ​​above 70 considered overbought and below 30 oversold. In the case of Lululemon, its RSI indicates strong momentum that is likely to continue for some time. Combine that with its ability to beat analysts’ expectations for its earnings and bullish analyst updates this week, and it’s hard not to be excited about what’s to come.

Before you consider Lululemon Athletica, you might want to hear this.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Lululemon Athletica wasn’t on the list.

While Lululemon Athletica currently has a Moderate Buy rating among analysts, the top-rated analysts think these five stocks are Strong Buys.

View five stocks here

Growth stocks offer great bang for your buck, and we have the following future superstars that are definitely worth considering for your portfolio.

Get this free report

Did you like this article? Share this with a colleague.

The link has been copied to the clipboard.