Analysts, Options Bulls Cheer Under Armour Stock After Earnings

Under Armour reported a top-line beat-and-raise for the first quarter

Digital Content Manager
May 5, 2021 at 10:32 AM
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Apparel retailer Under Armour Inc (NYSE: UAA) stepped into the earnings confessional last night, and like its sponsor Jordan Spieth, dropped the results right on the green. Under Armour reported adjusted first-quarter earnings of 16 cents, far surpassing the four cent estimates. Revenue also topped forecasts, and the company upped its full-year guidance in anticipation of a spike in demand.

So far, this beat-and-raise has earned an upgrade from Barclays to "overweight" from "equal weight," and another to "buy" from "neutral" at UBS. The latter also hiked UAA's price objective to $36 from $26, noting growth for the company is happening sooner than expected. At least 11 analysts followed suit with price-target hikes as well. 

In turn, Under Armour stock is up 6.9% at $25.57 at last check, and earlier hit a roughly two-year high of $26.18. In carving out this channel of higher highs, UAA has relied on support from its 80-day moving average. Longer term, the equity sports an impressive 178.7% year-over-year lead.

The slew of upgrades today is no surprise, given analysts were split towards the security coming into today. Of the 19 in question, 10 carried a tepid "hold" or worse rating, while nine said "strong buy."

What's more, the equity could benefit from a short squeeze. Short interest rose 16.8% in the last two reporting periods, and the 18.81 million shares sold short account for 10% of UAA's available float.

Drilling down to today's options activity, more than 8,000 calls have already crossed the tape, which is seven times what is typically seen at this point. Most popular is the 5/7 24-strike call, followed by the 26-strike call in the same weekly series. Buyers of these options expect more upside for UAA by the end of the week, when contracts expire.

These options traders are in luck, as now seems like a great time to weigh in on the security's next move with options. This is per Under Armour stock's Schaeffer's Volatility Index (SVI) of 42%, which stands in the sixth percentile of its annual range. This means options players are currently pricing in low volatility expectations.

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