Footwear specialist stock Birkenstock Holding (BIRK) has been moving steadily higher since its Nov. 6 two-year low of $38.16, last seen up 0.8% to trade at $45.02. The equity has broken past several moving averages during its climb, most recently closing above the 80-day moving average for the first time in 21 trading days.
Per Schaeffer’s Senior Quantitative Analyst Rocky White, this “crossover” event has occurred three times over the past three years, after which BIRK was higher one month later 100% of the time, averaging an impressive 15.7% gain. From its current perch at $44.75, a move of similar magnitude would put the shares just above $52, an area that rejected a rally in July and August and could serve as a hesitation point. Per the chart below, this would also take BIRK past a trendline of lower lows stemming from those two respective rallies.
Short covering could add fuel to the fire. Short interest fell by 16% in the two most recent reporting periods, yet the 7.88 million shares sold short currently represents 14% of the stock’s available float. It would take shorts nearly four days to buy back their bearish bets, at BIRK’s average pace of trading.
The retailer steps into the earnings confessional for its fiscal fourth-quarter report after the market closes on Thursday, Dec. 18. Last December, BIRK added 2% after earnings, while the shares gapped higher by nearly 6% after their May report. Overall, the stock averaged a post-earnings move of 6.3%, regardless of direction, over the last two years. This time around, the options market is pricing in a much larger-than-usual post-earnings move of 11.2%.
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