Retail Stock Flirting With Record Highs Before Earnings

ANF is primed for a short squeeze ahead of the retailer's earnings report next week

Digital Content Manager
Feb 29, 2024 at 2:38 PM
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Retailers are rounding out the last of the earnings season, with Abercrombie & Fitch Co (NYSE:ANF) set to announce fourth-quarter results before the open on Wednesday, March 6. The shares were last seen up 0.5% to trade at $126.65, following price-target hikes from both Jefferies and Telsey Advisory to $149 and $140 from $120 and $105, respectively.

ANF earlier came just 1 cent shy of its Feb. 27, record high of $128.68, before pulling back to support near the $124 region. The equity is on track for its 12th win in the last 14 trading days, and sports a jaw-dropping 333.3% lead year-over-year lead, with a 43.6% gain amassed already in 2024.

ANF Intraday

The equity finished five of its past eight post-earnings sessions lower, but was higher after the three most recent next-day sessions, including a substantial 31.1% pop back in May. ANF averages a move of 15.9% in the last two years, regardless of direction, but the options pits are pricing in a slightly bigger-than-usual swing of 16.4% this time. 

A post-earnings pop could spell trouble for short sellers and additional tailwinds for ANF. Short interest makes up 11.9% of the stock's available float, and it would take over four days for traders to buy back their bearish bets.

Options traders have been betting on a move lower. The security's 50-put put/call volume ratio of 2.14 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 78% of readings from the past year. A shift in sentiment could push Abercrombie & Fitch stock even higher.

It's also worth noting that ANF's Schaeffer's Volatility Scorecard (SVS) checks in at a 81 out of 100. In other words, the security has consistently realized higher volatility than its options have priced in.

 

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