Wells Fargo cut UAA's rating to "equal weight" from "overweight"
Wells Fargo earlier downgraded Under Armour Inc (NYSE:UAA) to "equal weight" from "overweight" and lowered its price target to $8 from $12, following a round of job cuts at its Baltimore headquarters. The brokerage firm noted the retailer's excess inventory, as well as overexposure in North America and its brand new CEO. At last check, UAA is down 2.5% to trade at $7.17.
The brokerage bunch was already skeptical of the shares coming into today, with 13 of the 21 in question calling them a tepid "hold" or worse. And while short interest pivoted 22.2% lower in the last two reporting periods, the 13.09 million shares sold short still account for 7% of the stock's available float.
The security ran into a ceiling at the $8 level once again this week, while the descending 40-day moving average has been stifling rallies throughout most of 2023. Under Armour stock is today pacing for its fourth-straight daily drop, as it carries a 30.7% year-to-date deficit.
Despite this technical weakness, options traders lean firmly bullish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UAA's 50-day call/put volume ratio of 5.04 sits higher than all readings from the last year.
What's more, the equity boasts affordably priced premiums, per its Schaeffer's Volatility Index (SVI) of 40% that ranks at the extremely low 1st percentile of annual readings. It's also worth mentioning UAA's Schaeffer's Volatility Scorecard (SVS) stands at 91 out of 100, meaning it has generally exceeded options traders' volatility expectations over the past 12 months.