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Lululemon (LULU) stock jumped more than 10% after the market closed on Tuesday as the company beat Wall Street estimates for quarterly revenue and adjusted earnings per share.

The beat comes alongside bullish guidance for the full-year 2023 that also landed higher than what Wall Street had been anticipating. Lululemon expects full-year revenue in a range of $9.3-$9.4 billion and adjusted earnings per share range of $11.50-$11.72.

But Morningstar Equity Analyst David Swartz believes shares of Lululemon are still “overvalued.” Swartz cites Lululemon’s gross margins continuing to decline on yearly basis as a potential concern for Lululemon if the high-promotion environment continues in retail over the next several quarters.

Lululemon shares traded near $360 a share after hours on Thursday. Swartz sees fair value for the stock at $233.

Above, Swartz joins Yahoo Finance’s Seana Smith and Dave Briggs to break down Luluelmon’s latest quarterly earnings report.

00:00:05 - Instant reaction to Lululemon’s report

00:00:45 - Why Lululemon is overvalued