J.P. Morgan Securities cut its price target on Under Armour Inc (NYSE:UAA) to $21 from $25, though this is still an 11.6% premium to last night's close. In reaction, UAA stock is down 1.2% to trade at $18.58, but finding support near its 320-day moving average, which served as a floor in late October, too.
The pullback to this trendline could signal a short-term rally for Under Armour shares. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the stock's previous retreat to this trendline resulted in a one-month gain of 25.9%, and culminated in a record high of $24.96 earlier this month. This would just echo UAA's long-term performance this year, with the shares up 29% so far.
Options traders have been buying to open puts over calls at a quicker-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UAA's 10-day put/call volume ratio of 1.40 ranks in the 81st annual percentile.
This skepticism is seen outside of the options pits, too, with 19 of 24 covering analysts maintaining a "hold" or worse rating on Under Armour stock. Plus, the average 12-month price target of $20.96 is a tame 12% premium to current trading levels. Should UAA take another sharp bounce from its 320-day trendline, a capitulation from some of the weaker bearish hands could fuel the stock's fire.