Why Under Armour, Inc. Could Be Poised for Higher Highs

Outperforming Under Armour Inc (UA) is surprisingly surrounded by pessimism

by Alex Eppstein

Published on Dec 31, 2014 at 9:40 AM
Updated on Jun 24, 2020 at 10:16 AM

Under Armour Inc (NYSE:UA), which was recently named the Yahoo Finance 2014 "Company of the Year," has been a technical beast. Year-to-date, shares of the athletic apparel maker have gained 57.1% to land at $68.53. However, not everyone has joined the stock's bullish bandwagon.

Daily Chart of UA since January 2014

The one place where optimism is evident is in UA's options pits. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has accumulated a call/put volume ratio of 2.08 -- with traders buying to open more than two calls for every put. Furthermore, this ratio ranks in the bullishly skewed 67th percentile of its annual range.

Short sellers, however, aren't sold on UA. In fact, 6.8% of the stock's float is sold short, which would take roughly seven sessions to buy back, at average daily trading volumes. This potentially paves the way for a short-covering rally, assuming the shares can sustain their long-term trek higher.

Likewise, nearly half of the analysts covering Under Armour Inc (NYSE:UA) rate it a "hold" or "sell." Plus, the security's average 12-month price target of $72.43 stands at a slim premium to its current perch. This leaves the door wide open for a round of upgrades and/or price-target hikes to usher in a fresh wave of buying power.


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