Shares of Lululemon Athletica (LULU) - Get Report screamed higher on Thursday. On what is an otherwise quiet trading session, Lululemon stock closed higher by 14.13% to $167.54 and making new all-time highs.
The explosive move has shares rocketing higher and bulls wondering just how high this name can go. Can it hold its new highs and if so, can it make a run toward $200? It would be a large move, but after a strong quarterly report, it's not out of the cards.
Lululemon beat on earnings and revenue expectations, even after raising its outlook back in January following a strong holiday stretch. Comps soared 17% year-over-year while sales climbed 26%. Let's check out the chart after these impressive results.
Trading Lululemon Stock
Lululemon stock easily hurdled its 2019 high near $158 and even gapped over its prior all-time high near $165. That's a very impressive move for bulls!
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How do we handle such a large rally from here? For longer-term traders and investors, we want to see Lululemon stock stay north of this $165 level. Even though that would put shares below Thursday's post-earnings range, holding the prior highs would be a bullish sign of more upside in the future. At the very least, bulls want to see this $158 to $160 level hold as support.
In the short term, Lululemon stock is pretty tough to buy after a rally like this. However, should we get a strong close in LULU on Thursday, bulls will have a chance to buy on Friday. If the stock opens slightly lower on Friday and quickly turns green, that's the trigger to get long. We can use the morning lows as the stop-loss, assuming they are reasonable. It may only be a day trade, or it may be a trade that evolves into a long swing trade.
Barclays analyst Matthew McClintock has an overweight rating and $200 price target on Lululemon stock. Earlier this week, he reiterated his optimistic outlook, saying, "we continue to believe Lululemon's [total addressable market] is ever-expanding as the company has entered into men's [market] in a meaningful way, has seen success in office, travel [and] commute offerings and continues to see a significant amount of opportunity in bras and outerwear."
Can it get to his price target? To get there, Lululemon stock will need to rally another 17%. Although that's a lot to ask for, the company clearly has momentum right now. The quarter was strong, while management's full-year earnings and revenue outlook came in ahead of consensus expectations as well. Should the overall market hold up, this momentum could allow Lululemon stock to continue its bullish run after a great multi-month period of consolidation.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.