Security earned no less two upgrades and 12 price target hikes this morning
Clothing retailer Under Armor Inc. (NYSE: UAA) entered the winning denomination yesterday evening and, like his sponsor Jordan Spieth, dropped the results directly onto the green. Under Armor reported adjusted earnings of 16 cents for the first quarter, well beating its four cents estimates. Revenue also beat forecasts, and the company raised its forecast for the full year in anticipation of a surge in demand.
So far, this beat-and-raise has earned Barclays an upgrade to “overweight” from “equal weight” and another to “buy” from “neutral” at UBS. The latter also raised the UAA’s price target from $ 26 to $ 36, noting that the company’s growth is coming earlier than expected. At least 11 analysts also followed suit with target price increases.
In turn, Under Armor stock rose 6.9% on the last check to $ 25.57, previously hitting a two-year high of $ 26.18. In crafting this higher highs channel, the UAA relied on the support of its 80-day moving average. In the longer term, the share shows an impressive lead of 178.7% over the previous year.
Today’s numerous upgrades are no surprise as analysts were divided on today’s security. Of the 19 in question, 10 had a lukewarm “hold” or lower rating, while nine said “strong buy”.
In addition, equity could benefit from a brief press. Short rates rose 16.8% over the last two reporting periods and the 18.81 million short positions sold represented 10% of the UAA’s available free float.
With options activity today, more than 8,000 calls have crossed the band, which is seven times the normal current rate. The 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 the UAA by the end of the week, when the contracts expire.
These options traders are in luck because now seems like a good time to consider the security’s next move with options. This corresponds to the Schaeffer’s Volatility Index (SVI) of Under Armor shares of 42%, which is in the sixth percentile of its annual range. This means that option players are currently pricing in low volatility expectations.