Firearms Stock Flies After Earnings Beat

To follow, Cowen and Company raised its price target to $36 from $27

Deputy Editor
Dec 16, 2020 at 11:24 AM
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The shares of American Outdoor Brands Inc (NYSE:AOUT) are soaring today after the firearms and outdoor sports company reported a fiscal second-quarter earnings beat and raised its full-year guidance. Cowen and Company upped its price target to $36 from $27 in response, and the AOUT is up 9.5% at $18.51 at last check after earlier trading as high as $19.55. 

Today's surge has AOUT surpassing pressure at the $16 region for the first time since August -- the month it began public trading after the summer spinoff with Smith & Wesson. Extending yesterday's gains after bouncing off former pressure at the 20-day moving average, the stock is now up 32.8% in the last week. 

The options pits are seeing a massive amount of post-earnings volume. So far, 6,738 calls and 1,017 puts have crossed the tape -- 29 times what's typically seen at this point. The December 20 call is seeing the most action --with new positions being opened -- meaning plenty of traders are betting on more upside for the stock by the contract's expiration at the end of this week.

Now could be a good time to weigh in on AOUT's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 75% stands in the low 9th percentile of all other readings, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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