Apparel Stock Sees Bear Notes After Margin Warning

Under Armour stock is down over 61% year-over-year

Digital Content Manager
Aug 4, 2022 at 10:21 AM
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Analysts are chiming in on Under Armour Inc (NYSE:UAA), after the athletic apparel retailer's fiscal-first quarter earnings met Wall Street's estimates, while revenue came in above expectations. However, the company warned margins may suffer due to excess inventory, which has led to increased discounts. In turn, no fewer, no fewer than five analysts slashed their price targets, including Credit Suisse to $11 from $13.

Last seen down 2.3% at $9.12, UAA yesterday failed to conquer the $10 level -- a ceiling for shares since mid-June. While the $8 level still provides a solid area of support, longer term Under Armour stock is down 61.9% year-over-year.

Short sellers are placing their bets, with short interest up 4.8% in the last two reporting periods. The 20.90 million shares sold short now make up 11.1% of UAA's available float.

The options pits lean bearish, too. This is per the security's 50-day put/call volume ratio of 1.10 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which is higher than all readings in its annual range. This suggests long puts have been getting picked up at a much faster-than-usual rate. 

Echoing this, UAA's Schaeffer's put/call open interest ratio (SOIR) of 1.09 ranks higher than 96% of readings from the last year, indicating these short-term options traders are unusually put-biased.

These options traders are in luck, given the equity's Schaeffer's Volatility Scorecard (SVS) sits at a 98 out of 100. This means UAA exceeded volatility expectations in the past year -- a good thing for options buyers.

 

  

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