M&A Buzz Sparks Volatility in the Retail Sector

Michael Kors stock is widening its year-to-date deficit today

Managing Editor
Jul 25, 2017 at 10:20 AM
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U.S. stocks are mixed this morning, as markets digest the latest round of big-cap earnings. Among specific equities in the news are carmaker General Motors Company (NYSE:GM), as well as retail stocks Michael Kors Holdings Ltd (NYSE:KORS) and Barnes & Noble, Inc. (NYSE:BKS). Here's a quick look at what's moving shares of GM, KORS, and BKS.

GM Stock Swings Lower After Revenue Miss

General Motors stock started the session in positive territory, after the car giant reported earnings of $1.89 per share that exceeded the consensus $1.69 per share estimate. However a revenue miss and production cut have the shares trading down 0.4% at $35.69. Longer term, GM stock has been on the mend since skimming a year-to-date low near $32 on May 25, adding roughly 12% -- with the upside only accelerated by a sharp bounce off its 50-day moving average in late June.

There remains a great deal of pessimism priced into the shares, though. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GM's 10-day put/call volume ratio of 2.67 ranks 5 percentage points from an annual high, meaning puts have been bought to open over calls at a near-annual-high clip. An unwinding of these bearish bets could drive GM stock even higher.

KORS Stock Can't Capitalize on Jimmy Choo Purchase

Michael Kors stock is down 4% to trade at $33.43, after the company said it will buy high-end shoemaker Jimmy Choo for $1.2 billion. Today's negative price action is more of the same for KORS stock, which is down 22.2% year-to-date, with several rally attempts quickly halted by the 80-day moving average. Not surprisingly, most analysts are on the bearish bandwagon, with 15 of 16 analysts rating KORS a "hold" or worse. 

Barnes & Noble Stock Soaring After Activist Investor Recommends Sale

Barnes & Noble stock is up 9.9% to trade at $7.80, on reports activist investor Sandell Asset Management is urging the book retail chain to put itself up for sale. Sandell believes BKS stock could go for at least $12 per share.

Today's rally has BKS trading north of their 80-day moving average for the first time in six months, a trendline that kept a lid on the shares in January. Nevertheless, the stock is still staring at a 30% year-to-date deficit, and hit a five-year low of $6.25 on June 21.


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