Fossil Stock Shorts Get Crushed After Earnings

FOSL stock is up 82% in electronic trading

Feb 14, 2018 at 9:27 AM
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Shares of Fossil Group Inc (NASDAQ:FOSL) have gapped nearly 82% higher in electronic trading -- set to soar to their highest point since an early May bear gap, and poised for their best day ever -- after the watchmaker reported better-than-expected fourth-quarter earnings and revenue, citing strong demand for wearables. The retailer also said same-store sales jumped 2% in the last three months of 2017, while e-commerce sales surged 31%.

Analysts were quick to chime in after the earnings beat, too, with no fewer than five brokerages boosting their price targets on the retail shares. The most optimistic came from KeyBanc, which raised its FOSL price target to $25 from $10 -- a 177% premium to last night's close at $9.04, and territory not charted since last February.

The stock -- which topped out above $139 at its April 2012 peak -- has been charting a path steadily lower since late 2014. More recently, FOSL's rally off its early November 17-year low of $5.50 was halted near the $11 mark -- a familiar level of resistance that's contained the security since an early August bear gap. Today's premarket upside has Fossil ready to slice through this region, and trade north of its 200-day moving average for just the second time since December 2016.

A short squeeze will likely help fuel Fossil's fire today. Short interest is up more than 41% since early October, to 18.89 million shares -- the most in at least 16 years. This accounts for 43.2% of FOSL's available float, or 7.5 times the stock's average daily pace of trading.

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