Analyst Pressure Weighs on Lululemon Stock Before Earnings

Lululemon Athletica Inc (NASDAQ:LULU) stock is sliding ahead of the athletic retailer's third-quarter earnings report, due out after the close Thursday, Dec. 11. Jeffries expects disappointing results, reiterating its "underperform" rating and slashing its price target to $120 today. The firm cited shrinking margins, pricing pressures, and competition from Alo Yoga, pushing the shares down 4.8% to trade at $180.80 at last glance. 

On the charts, LULU has yet to recover from its September 5 post-earnings bear gap, despite a boost from the the company's recent partnership with the NFL and Fanatics. The shares have found support at $160, home to their September 15 five-year low of $159.25, and a more recent floor at the 80-day moving average. Year to date, the equity is down 52.8%.

Lululemon stock's weak post-earnings history has contributed to much of its year-to-date deficit, with the stock dropping 18.6%, 19.8%, and 14.2% after its last three reports. This time around, the options pits are pricing in a 17.8% swing, regardless of direction, which will be a make-or-break moment for LULU on the charts. 

Options traders have been more bearish than usual ahead of earnings as well. The stock's 10-day put/call volume ratio of 1.12 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 88% of readings from the past year.