Short interest spiked just before earnings
Ferrari N.V. (NYSE:RACE) is trading up 7.2% today at $128.15 after the company said 2017 was a record year, while announcing plans to double its core earnings by 2022. This brings the stock's one-year gain to 107% and it earlier traded at a record high of $129.87. In the meantime, RACE shares have been crushing short sellers, who've continued betting against the equity in recent months.
Looking closer, short interest on Ferrari increased by 19% in the last two-week reporting period alone. Going by the stock's average daily trading volume, it would now take these bears more than eight days to buy back their positions. This points to more than enough buying power on the sidelines that could come in and lift RACE higher.
On the other hand, options activity has been bullish. In fact, call buying has tripled put buying during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The largest increase in open interest during this time span occurred at the March 140 call, with the June 160 call taking second place. It should be noted, though, that some call buying could have been from shorts hedging their bets.
As for analysts, three of the five in coverage have "strong buy" ratings in place, but the average 12-month price target is now below current levels, checking in at $118.76. Considering this, a round of post-earnings bull notes could be coming down the pipe.