Under Armour Stock Brushes Off Bear Note Ahead of Earnings

The equity still looks ripe for a short squeeze

Digital Content Manager
Oct 28, 2021 at 3:36 PM
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Apparel retailer Under Armour Inc (NYSE:UAA) is brushing off some negative analyst attention this afternoon, ahead of its third-quarter earnings call, which is due out before the open on Tuesday, Nov. 2. Telsey Advisory Group cut the equity's price target to $25 from $27 earlier today, but UAA was last seen up 0.9% at $21.91. Below, we will dive deeper into the security's technical performance of late, as well as its previous post-earnings activity. 

The last time we checked in with Under Armour stock, the equity was flashing no fewer than two historically bullish signals. And while the shares have been testing a floor at the $20 of late, they are also consolidating above the formerly resistant 40-day moving average, while attempting to break through a ceiling at the $22 mark. Year-over-year,  UAA is up 65.1%.

UAA 40 Day

The equity has a dismal history of post-earnings reactions, finishing five of eight next-day sessions lower in the last two years. However, Under Amour stock did log a 7.5% post-earnings pop in August. Options traders are pricing in an 11.7% swing for UAA this time around, which is higher than the 9.1% move it averaged after its last eight reports, regardless of direction.

While short sellers have already started to hit the exits, the security still looks ripe for a short squeeze, too. Short interest fell 6.4% in the most recent reporting period, but the 11.80 million shares sold short account for a significant 6.3% of the stock's available float.

A shift in the options pits could create even more tailwinds for UAA. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio sits higher than 84% of readings from the past 12 months. This means long puts have been getting picked up at much faster-than-usual pace in the last two months.

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