Surprise Earnings Beat Gives Abercrombie & Fitch Stock a Leg Up

There's still plenty of pessimism surrounding ANF, however

Deputy Editor
Aug 27, 2020 at 9:03 AM
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An unexpected second-quarter profit is sending the shares of clothing retailer Abercrombie & Fitch Co. (NYSE:ANF) higher today. The company also posted revenue that exceeded analysts' estimates, citing a 55% surge in digital sales. However, ANF did say that it expects to see continued material adverse effects from the ongoing pandemic, adding that its distribution expenses were down nearly 18% last quarter. At last check, ANF is up 7.8% at $12. 

Like most of its sector peers, ANF has had a difficult time separating itself from its mid-March lows, with its latest rally attempt in early June quickly snubbed by the 200-day moving average. The equity has been trading narrowly between the $9 and $11 regions, though a breakout yesterday put ANF just north of here. Now, the stock is also looking to topple its 160-day moving average for the first time in six months. 

Analysts are still approaching Abercrombie & Fitch stock with caution. Coming into today, just three of the 11 in coverage considered it a "strong buy," compared to six "hold" ratings, and two "sell" or worse ratings. Plus, the 12-month consensus price target of $12.25 is a slight discount to last night's close. 

And while short interest is starting to unravel, down 6.6% in the last reporting period, these bears are still firmly in control. The 12.41 million shares sold short makes up 20.4% of ANF's available float, and would take one week to cover at the stock's average daily pace of trading. Should more of these shorts start to hit the exits, it could put some additional wind at ANF's back. 

 

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