Deutsche Bank: Buy the Dip on This Retail Stock

JWN stock suffered a steep bear gap after earnings last week

Managing Editor
May 23, 2018 at 10:06 AM
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Department store stock Nordstrom, Inc. (NYSE:JWN) is higher in early trading, after receiving an upgrade to "buy" from "hold," and a price-target hike to $55 from $52, at Deutsche Bank. The upgrade comes less than a week after the company reported a same-store sales miss, sending JWN stock gapping lower. The brokerage firm said the sell-off is overdone, making for a compelling entry point to buy Nordstrom shares.

JWN stock is up 2.9% at $47.10, at last check, on pace to reclaim a perch atop its formerly supportive 160-day moving average. The equity is still slightly lower on a year-to-date basis, however.

Before today's boost, analyst sentiment was overwhelmingly pessimistic on JWN, with 10 of the 12 brokerage firms following the stock sporting tepid "hold" or worse recommendations. And while short interest on Nordstrom stock fell 2.2% during the past two reporting periods, it still represents 14% of the stock's total available float. At JWN's average daily trading volume, it would take over two weeks for the shorts to cover their bearish bets.

Lastly, those looking to purchase premium on short-term JWN options can do so at a bargain. In the wake of the stock's post-earnings volatility crush, its Schaeffer's Volatility Index (SVI) of 28% ranks in the 1st annual percentile. In other words, low volatility expectations are being priced into near-term contracts.

 

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