To The Moon

$Lululemon Athletica(LULU)$ $Nike(NKE)$ $On Holding AG(ONON)$ 🤔🔥🎯 Lululemon’s Deep-Stretch Discount, Buyback Muscle at Full Flex, and a 16 × PE Mat Is This the Easiest 200-Dollar Yoga Pose I’ll Ever Take? 🤔🔥🎯

I’ve stalked plenty of fallen momentum names this year, yet $LULU’s valuation gap still jumps off my screen. The stock trades at just 16 × forward earnings, its lowest multiple in more than a decade, and well below the Magnificent Seven’s frothy 44 × average and even the 28 × average without Tesla.   

Fundamental Pulse

Q1 25 revenue reached 2.4 billion, up 7 %, with constant-currency growth at 8 %. Diluted EPS landed at 2.60 while gross margin widened to 58.3 %, a 60-bp lift thanks to product mix and freight relief. Management tightened full-year guidance to 14.58-14.78 EPS and 11.15-11.30 billion revenue, citing tariff drag and patchy US demand.  

Buyback Bonanza

Across the last four quarters Lululemon spent about 1.6 billion on its own shares, driving a trailing buyback yield near 6 % and removing roughly 6 % of the float. The board still has 1.7 billion authorised, giving management runway to keep shrinking share count if the price stays soft.  

Valuation Lens

My peer bar chart shows Lululemon’s 16 × forward PE undercutting Google at 19 ×, Novo Nordisk at 20 ×, UnitedHealth at 14 ×, and Oscar at 20 ×. Even premium peers Nike and On Holding sit near 30 ×. Finbox also flags an 11.3 % median EPS CAGR for the next five years, well above management’s 7-8 % top-line goal.  

Technical Check

Price bounced off 219.97 but still hovers beneath every major moving average. MA 20 is 294 and MA 30 is 327, both sloping south. Weekly RSI sits at 30, just oversold, and MACD remains negative, signalling bearish momentum. A weekly close above 258.61 would confirm a short-term floor, while a push through 294 would flip the medium-term trend.

Street Temperature

Analysts split into three camps: 🟢 16 Buy, 🟡 9 Hold, 🔴 2 Sell. Morgan Stanley trimmed to Equal-Weight at 280, Jefferies remains bearish at 175, while Stifel still waves a 324 target. The FactSet average sits at 305, implying 29 % upside from 236.  

Scenario Map

Bull 45 %: Inventories normalise, tariffs ease, and buybacks lift FY 26 EPS to 16.00. A 22 × multiple points to 352.

Base 35 %: Revenue up 5 %, margin contracts 100 bp, EPS 14.30. Valuation holds near 18 ×, price settles at 257.

Bear 20 %: Tariffs widen, markdowns bite, EPS slides to 12.80, multiple drops to 14 ×, price revisits 180.

Risk Radar

• Potential tariff escalation on Vietnam and Sri Lanka sourcing could shave another 150 bp from gross margin. 

• Athleisure saturation invites cheaper fast-fashion rivals, pressuring traffic and average selling price.

• Elevated inventory raises markdown risk if back-to-school demand falters.

What I’m Watching Next

• August earnings call for progress on Americas comps and inventory days.

• Any 13D or 13G filings signalling activist interest at these depressed multiples.

• Weekly close above 258.61 to trigger a tactical long, or break of 195.57 to reload bearish exposure.

Actionable Game Plan

I’m scalping August 250-strike calls if price confirms above 258, targeting a gap-fill run to the MA 20. For longer horizons I’m building a starter core near 200 with a stop at 188, aiming for 330 plus by mid-26. Income-oriented investors could write 200-strike puts at 8 % implied yield, effectively getting paid to wait for an entry.

Conclusion

The market has priced $LULU like a fading fad, yet its buyback firepower, sticky gross margin, and double-digit EPS runway suggest a recovering growth story masquerading as value. If management threads the tariff needle, today’s 16 × multiple might look like the cheapest yoga class on Wall Street.

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Trade like a boss, happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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