Macy's Stock Soars After Upbeat Earnings, Blowout Same-Store Sales

Analyst upgrades could boost M stock even more

by Patrick Martin

Published on May 16, 2018 at 10:20 AM

Macy's Inc (NASDAQ:M) stock is up 6.7% to trade at $31.95 this morning, and earlier hit a fresh annual high of $32.74. The retail giant reported first-quarter adjusted earnings of 48 cents per share on revenue of $5.5 billion, numbers that surpassed analyst forecasts. More notably, same-store sales increased by 4.2%, crushing the 1.4% rise Wall Street expected. Macy's also raised its full-year guidance. 

Macy's is now on track to post its best single-session gain of 2018. M has tacked on over 26% this year, and is currently riding a six-month winning streak. Moreover, the shares have enjoyed strong support from the 50-day moving average in recent months.

Despite the recent charge up the charts, analysts remain hesitant to come aboard. Of the 11 brokerages in coverage, 10 rate the stock a "hold" or "strong sell." Furthermore, the equity's average 12-month price target of $29.79 now sits below the current perch. A round of overdue upgrades and/or price-target hikes could nudge the security even higher, especially after this impressive quarterly update.

It's no surprise then that short sellers have also piled on the retail name, with short interest tripling in the past year. The 46.80 million shares sold short represents 15% of Macy's total available float, and more than six days of pent-up buying power, at the average pace of trading. A continued surge could shake some of the weaker bearish hands loose, creating even bigger tailwinds for the security.

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