The security earned no less than nine price target increases this morning
The shares of Stitch Fix Inc (NASDAQ: SFIX) are up 10.8% to trade at $ 64.22 on the last review after the online personal styling name reported lower-than-expected losses of 18 cents per share in the third quarter. The company attributed the positive results to an increase in active customers of around 20% to 4.1 million and raised its revenue forecast for 2021 above analysts’ expectations.
The broker group reacts optimistically. The security made no fewer than nine target increases this morning, including a high from Truist Securities to $ 77 from $ 60. However, there is still plenty of room for further hikes and / or upgrades to the target price, as 10 of the 16 analysts in the reporting have a tepid “hold” rating. Also, the 12 month consensus target of $ 62.14 is a 2.7% discount from the current price.
Digging deeper, Stitch Fix stock began swinging higher in early May after falling to $ 37 levels on Jan. 27, its all-time high of $ 113.75. Stocks have also regained support from the 10-day moving average, and are currently 164.3% ahead of last year.
Security also seems ripe for a short squeeze. Short rates rose 25.8% over the past two periods, and the 12.66 million stocks sold short now account for a whopping 25.4% of the available float in Stitch Fix stock, or a week’s pent up buying power.
Additional tailwind could come from a shift in the option pits, which are trending downwards. This corresponds to the Put / Call Open Interest Ratio (SOIR) of SFIX von Schaeffer of 2.08, which is above all values of the previous year. In other words, short-term options traders were no longer put biased.
Drilling down on today’s options activity has so far exceeded 18,000 calls and 18,000 puts, which is 11 times the intraday average. The most popular is the 6/11 70 strike call, followed by the 65 strike call in the same weekly series, both of which open new positions.
After all, that’s equity Schaeffer’s volatility scorecard (SVS) ranks a high 86 out of 100. This is great news for option buyers as it implies the stock tends to beat volatility expectations.