Lululemon stock forecast after reporting strong holiday sales

On Thursday, Lululemon Athletica Inc. (NASDAQ:LULU) shares declined slightly in the after-hours session despite announcing solid fiscal third-quarter results. The company reported its most recent quarterly results after markets closed, beating the consensus for analyst expectations on revenue and earnings. Lululemon also reported strong holiday season sales.

The athletic apparel retailer posted FQ3 non-GAAP earnings per share of $1.44, beating the average for analyst estimates of $1.40. On the other hand, its GAAP EPS of $1.62 outperformed the expectation of $1.39, while the quarterly revenue grew by 29.5% from the same quarter a year ago to $1.45 billion, exceeding expectations by $10 million.

The Vancouver, Canada-based company reported a 27% same-store sales growth during the quarter.

The stock has pulled back nearly 13% since the 16th of November, trimming this year’s gains to about 17%.

Is it time to bet on growth?

From an investment perspective, Lululemon shares trade at steep trailing 12-month and forward P/E ratios of 66.00 and 46.35, respectively. 

Therefore, growth investors could opt for alternatives in the market. On the other hand, analysts expect its earnings to grow at an average annual rate of 31.95% over the next five years compared to 18.90 in the previous five. 

Therefore, it could be an exciting option for long-term investors.

Technically, Lululemon shares seem to be trading within a sharply descending channel formation in the intraday chart. As a result, the stock has plummeted closer to the oversold conditions of the 14-day RSI.

Therefore, investors could target technical rebound profits at about $432.40, or higher at $453.41. On the other hand, $401.30 and $384.90 are crucial support zones.