Boot Barn Stock Hits New High Ahead of Earnings

Boot Barn stock is putting the squeeze on shorts

Managing Editor
May 14, 2018 at 3:20 PM
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Western apparel retail chain Boot Barn Holdings Inc (NYSE:BOOT) is slated to report its fiscal fourth-quarter results tomorrow after the market closes. On the charts, BOOT has had a strong run, gaining 150% over the past nine months, and today reaching a more than two-year high of $22.17. The stock has also established a floor at the $17 level in recent months, which acted as support for BOOT when it first began trading back in late 2014.

Daily Chart of BOOT Since May 2017 With Highlight

Digging into earnings history, BOOT has posted a positive return the day after five of the company's last seven reports. In fact, last November, the retail stock posted an impressive 17.9% gain the day after earnings. Currently, the stock sports an average post-earnings swing of 6%, regardless of direction. This time around, the options market is pricing in a 19% next-day move, per data from Trade-Alert. From the equity's current price of $21.75, a move of this magnitude to the upside would put the shares north of $23 -- territory not seen since August 2015.

Boot Barn stock is heavily shorted, too. The 5.15 million shares sold short represent 26.3% of the equity's available float. At BOOT's average daily trading volume, it would take more than two weeks for the shorts to cover their bearish bets -- meaning there's ample fuel for a short squeeze, should the shares continue their run higher.

Analysts, meanwhile, are mostly upbeat toward Boot Barn ahead of earnings, with six of seven brokerages maintaining a "strong buy" rating. However, the stock's average 12-month price target comes in at $22.56 -- a slight premium to current levels. This leaves the door open for price-target hikes on strong earnings report.

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