Abercrombie & Fitch (NYSE: ANF) stock price has surged to a record high as investors wait for its first quarter earnings scheduled for May 29th. It soared to a high of $150, bringing the year-to-date gains to 70%. It has also jumped by over 553% in the past 12 months, making it the best retail stock in the US.
Abercrombie & Fitch’s insiders are selling
Abercrombie & Fitch, a millennial-focused retailer, has done well because of its strong revenue and profitability growth. Its revenue jumped to $4.2 billion in the last financial year, a big increase from the $3.69 billion it made a year earlier. Its net income jumped to over $328 million.
Analysts anticipate strong revenue growth in its coming financial results. The average estimate is that revenue rose to $963 million. For the year, the expectation is that its revenue will jump to $4.58 billion followed by $4.7 billion in 2025.
Analysts are concerned about ANF’s valuation. It has a forward PE ratio of 18.24, higher than the sector median of 16. This valuation is a bit expensive for a company whose forward PE ratio stands at 8.93%.
Another concern is that insiders have been selling its shares to take advantage of the stock surge. Data compiled by MarketBeat shows that insiders have sold shares worth over $102 million in the past 12 months. Most of these sales have happened this year.
Some of the insiders selling the stock are Fran Horowitz, the CEO, and Jay Rust, an executive vice president, and Scott Lipesky, the CFO. Insiders now hold about 3.7% of the company.
Insider sales are often seen as red flags since these people often have more information about a company. However, in some cases, these sales are understandable because they form part of their portfolio diversification.
Abercrombie & Fitch stock technical analysis
The daily chart shows that the ANF share price has been in a strong bull run since 2020. It has soared from about $7 in 2020 to $150 today. Most recently, it has jumped above the crucial resistance level at $140, invalidating the double-top pattern that was forming.
Abercrombie & Fitch’s shares have also remained above all moving averages, signalling that bulls are in control. However, I believe that the stock is now priced to perfection. I also believe in the old German saying: trees don’t grow to the sky, meaning that there is always a limit to how high a stock can go over time. Just look at Tesla.
As such, there is a likelihood that the stock will pull back and retest the support at $140 after earnings.
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