Abercrombie & Fitch Stock Pops as Analysts Turn Bullish

Year-over-year, ANF already sports an over 216% lead

Digital Content Manager
Jun 9, 2021 at 10:25 AM
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Apparel retailer Abercrombie & Fitch Co. (NYSE:ANF) is up 0.8% to trade at $41.49 at last check, after Moody's yesterday changed its outlook on the equity to "positive." Earlier today, Jefferies followed suit with an upgrade to "buy" from "hold," in addition to a price-target hike to $57 from $46. The analyst in coverage said the brand's elevation efforts and cost reductions during the Covid-19 pandemic are now starting to yield benefits. 

Abercrombie & Fitch stock has been tearing up the charts since August, culminating in a May 28, seven-year high of $44.49. The 60-day moving average has been an essential source of support along the way, containing several of the security's pullbacks since it began climbing. Year-over-year, the stock already sports an impressive 215.7% lead. 

The brokerage bunch was pessimistic towards the security coming into today, indicating more upgrades could be on the horizon. Of the nine analysts in coverage, five carried a tepid "hold" or worse rating. Meanwhile, the 12-month consensus target price of $51.33 is a 23.2% premium to current levels.

The equity looks ripe for a short squeeze, too. Short interest rose 16% in the most recent reporting period, and the 5 million shares sold short now make up 8.2% of ANF's available float.

A shift in the options pits would create additional tailwinds for the security.  This is per Abercrombie & Fitch stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the 85th percentile of its annual range, indicating puts are being picked up at a faster-than-usual rate. 

Now seems like a great opportunity to bet on Abercrombie & Fitch stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 50% sits in the extremely low second percentile of its 12-month range. In simpler terms, option players are pricing in low volatility expectations at the moment.

 

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