Watch This Key Price Level: Lululemon Stock Jumps After Company Raises Full-Year Earnings Guidance

Lululemon Athletica (LULU) shares surged more than 8% in premarket trading on Thursday following the release of better-than-expected quarterly results. The activewear retailer also raised its full-year earnings guidance, provided an improved second-half inventory outlook, and announced an increase in its stock buyback program.

Key Takeaways

• Lululemon posted earnings of $2.54 per share in the first quarter, surpassing analyst expectations of $2.38 per share.
• Revenue for the period reached $2.21 billion, a 10% increase from the previous year and slightly above the $2.19 billion estimate.
• The company’s international business saw a 35% sales growth, offsetting a slower 3% revenue increase in the Americas.
• Lululemon forecasts net sales of $2.40 billion to $2.42 billion for the second quarter and expects EPS between $2.92 and $2.97.
• CEO Calvin McDonald anticipates an improvement in the company’s inventory position in the latter half of the year.

During the earnings call, McDonald addressed stocking issues related to color and sizing that persisted in the Americas business during the first quarter. However, he expressed confidence in the company’s ability to enhance its inventory position in the coming months. Additionally, Lululemon authorized an additional $1 billion to its stock buyback program, signaling management’s optimism about the company’s future prospects.

Chart Analysis

Lululemon shares have been trading within a falling wedge pattern since late March, indicating a potential upward price movement. The stock is poised to break above the wedge’s top trendline, suggesting a bullish trend reversal. Investors should pay close attention to whether the price can surpass the key $335 level, where it may face selling pressure from a horizontal line that connects various price actions over the past 21 months.

If Lululemon manages to close above $335, it could pave the way for further gains towards higher resistance around $387. As of early morning trading, LULU shares were up 8.4% at $334.25.

Conclusion

Lululemon’s strong quarterly performance and optimistic outlook have propelled its stock price higher. With improved earnings guidance, enhanced inventory projections, and a significant stock buyback program, the company is well-positioned for future growth. Investors should closely monitor how the stock reacts at the key $335 level, as it could dictate future price movements.

It is important to note that all information provided in this article is for informational purposes only and should not be considered as financial advice. Readers are advised to conduct their own research or consult with a financial advisor before making any investment decisions.

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