Under Armour Stock Sinks on Alarming Profit Margin Outlook

Year-over-year, UAA has shed more than 20%

Digital Content Manager
Feb 11, 2022 at 10:33 AM
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The shares of Under Armour Inc (NYSE:UAA) are down 8.9% at $18.22 this morning, despite the athletic apparel retailer posting better-than-expected fourth-quarter earnings and revenue. The company saw strong demand for its products, while higher prices for hoodies and leggings offset some pandemic-related supply chain disruptions. However, the company noted profit margins may shrink in the current quarter due to freight costs.

Analysts are yet to chime in on the results, but are mostly optimistic towards Under Armour stock. Of the 24 in coverage, 16 carry a "buy" or better rating, while eight say "hold" or worse. Plus, UAA's 12-month consensus target price of $28.50 is a 57.9% premium to current levels. Should this optimism begin to fade, the shares may drop lower still.

Meanwhile, short sellers are piling on. Short interest rose 8.5% in the last two reporting periods, and the 12.82 million shares sold short account for 6.8% of the stock's available float.

Under Armour stock had been chopping higher on the charts since a Jan. 28 annual low of $17.52, though this rally was rejected by the 50-day moving average during yesterday's session. Year-over-year, UAA is down 20.5%.

A shift in the options pits may create additional headwinds. This is per UAA's 50-day call/put volume ratio of 7.25 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 90% of readings in its annual range. This means long calls have been picked up at a quicker-than-usual pace.

So far today, 5,870 calls and 3,367 puts have crossed the tape, or six times the volume that is typically seen at this point. Most popular is the 2/11 17.50-strike put, followed by the 20.50-strike call in the same weekly series, both of which expire at today's close.

 

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