UAA could take out its June highs today
The shares of Under Armour Inc (NYSE:UAA) are coming off a huge week that saw them jump 31.8% thanks to a top- and bottom-line beat for the third quarter. UAA stock closed the week at $23.70, its highest settlement since late-June, putting it within striking distance of its June 7 52-week high of $24.69. The security is set to gain again this morning, up 2.5% in electronic trading, thanks to a round of bullish analyst attention.
Piper Jaffray is jumping on the UAA bandwagon by upgrading the stock to "overweight" from "neutral," citing the upside potential for future sales compared to tepid investor expectations. The brokerage firm also hiked its price target to $32 from $20. Meanwhile, Stifel upped its own price target to $30 from $27, saying it sees several ways the company can improve profitability and accelerate revenue growth.
To be sure, sentiment is still overly bearish on Under Armour, even as it sports a year-to-date gain of 64%. Just four of the 25 covering brokerage firms recommend buying the equity, and more than 10% of the float is held by short sellers. So as we've noted previously, UAA is an attractive target for bullish traders from a contrarian perspective, given the potential for bull notes and/or a short squeeze situation.
It's a similar setup in the options pits, where there's no sign traders are expecting the shares to keep gaining. Call open interest currently ranks in just the 15th annual percentile, and looking at the top open interest positions on UAA, there are almost no out-of-the-money calls to be found in either the November or December options series.