Schaeffer's Trading Floor Blog

Analyst Update: HHGregg, KB Home, and Fifth Third Bancorp

Analysts adjusted their ratings on HGG, KBH, and FITB

by 4/4/2013 12:23 PM
Stocks quoted in this article:

U.S. stocks are nearly flat at midday, as central bank action in Japan has been tempered by some lackluster jobless data. Among individual equities in focus are electronics retailer hhgregg, Inc.(NYSE:HGG), housing hotshot KB Home (NYSE:KBH), and regional banking bigwig Fifth Third Bancorp (NASDAQ:FITB), which have all attracted the attention of analysts.

  • The shares of HGG touched a new annual high of $12.13 today, after analysts at UBS lifted their price target to $11.75 from $7.25. The stock has advanced more than 71% so far in 2013, and could extend its upward momentum if the bears on Wall Street abandon ship. Despite decreasing by 3.4% during the past month, short interest still accounts for a whopping 44.6% of hhgregg's total available float. In fact, it would take nearly 28 sessions to repurchase all of these pessimistic positions, at the security's average pace of trading -- ample fuel for a potential short-squeeze rally.

  • Meanwhile, FBN Securities waxed optimistic on a slew of homebuilders, upgrading KBH to "sector perform" from "underperform." The stock was last seen about 2% higher in the $20.40 area, and has more than doubled over the past year. Nevertheless, the Street remains skeptical of the outperformer, with just four out of 17 analysts offering up "buy" or better endorsements. Meanwhile, 24% of KB Home's float is dedicated to short interest, representing nearly a week's worth of pent-up buying demand, at the stock's average daily trading volume. Should more analysts capitulate to the bulls' club, or should the shorts get spooked, KBH could enjoy some contrarian tailwinds.

  • Finally, Jefferies hiked its price target to $19 from $18 on FITB, though the shares are currently struggling to stay north of breakeven at $15.99. From a longer-term perspective, the equity has been stair-stepping higher since skimming the $9 region in August 2011, but has stalled in the $16 area, which has acted as a ceiling for Fifth Third Bancorp over the past three years. The options crowd is apparently bracing for some short-term speed bumps, too, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.76 stands just 2 percentage points from an annual peak. In other words, near-term traders have rarely been more put-biased during the past year. What's more, the April 16 strike is home to peak put open interest in the front-month series, with more than 5,600 contracts outstanding.

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