2 Retail Stocks Shocking Bears

A short squeeze could add fuel to Guess stock's fire

Managing Editor
Aug 24, 2017 at 10:10 AM
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Analysts are weighing in on retailer Guess?, Inc. (NYSE:GES), apparel company PVH Corp (NYSE:PVH), and tech stock HP Inc (NYSE:HPQ), all of which reported earnings. Here's a quick roundup of today's bullish brokerage notes on shares of GES, PVH, and HPQ.

Guess Shorts Could Get Squeezed

Guess? Inc stock is up 18% to trade at $14.74 -- a new year-to-date high -- after the company reported quarterly earnings that exceeded analyst expectations, and lifted its full-year forecast. As a result, both Jefferies and Telsey Advisory Group raised their price targets, to $13 from $11, and to $15 from $12, respectively. The rally today has the stock up 54% since its May 19 low of $9.56.

However, there are still plenty of short sellers hanging around GES shares. Despite decreasing by 6% during the last reporting period, short interest represents 18% of the stock's total available float. At Guess stock's average daily trading volume, it would take more than 10 sessions to repurchase all of those pessimistic positions -- plenty of fuel for a short squeeze to add fuel to the equity's fire.

PVH Option Bears Could Jump Ship

PVH Corp stock is up 5% to trade at $126.37, and just hit a four-year high of $130.25, after the firm reported second-quarter earnings that beat analyst expectations, and  raised its earnings outlook for the rest of the year. The earnings beat prompted price-target hikes to $145 from both Cowen and Company and Telsey Advisory Group -- in record-high territory. It's been an excellent year for PVH stock, which has tacked on 39% year-to-date.

Despite PVH's recent success, option traders have been preferring puts to calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PVH's 10-day put/call volume ratio of 8.41 ranks 1 percentage point from a 12-month high. An unwinding of skepticism in the options pits could translate into added upside for the retail stock.

HP Stock Aims for New Highs

HPQ stock is up 1.7% to trade at $19.18, after the company reported a fiscal third-quarter earnings and sales beat. In addition, HPQ received price-target hikes from Maxim and Jefferies, to $22 from $21 -- in six-year-high territory -- and to $19 from $18.75, respectively. The rise today has the shares within a chip-shot of their previous annual high of $19.58, reached on July 25. There's plenty of room for more upbeat analyst attention. Of the 16 brokerages covering HPQ, seven rate it a "hold."  

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