Analyst: Nordstrom Stock Lacks Near-Term Upside

Nordstrom call options have been extremely popular

Managing Editor
Jul 2, 2018 at 9:46 AM
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Nordstrom, Inc. (NYSE:JWN) stock is down 4.9% to trade at $49.25, after Cowen issued a downgrade to "market perform" from "outperform," while slashing its price target to $51 from $56. The analyst in coverage says the equity lacks near-term upside, citing store traffic and risks to margins, while calling out potential weakness from the department store's Rack division, as well.

On the charts, Nordstrom shares are now testing their 80-day moving average, a trendline that has provided support since late May, as well as the notable $50 level. The stock is fresh off its best month since November, and is holding on to a 4% year-to-date advance. For the most part, though, it's been chopping sideways throughout 2018.

Short sellers are likely cheering today's dip, although short interest fell 8% in the two most recent reporting periods to 13.24 million shares. This represents almost 12% of JWN's total available float, and more than six times its average daily trading volume.

Options buyers have handily favored calls in the past 10 days, albeit amid low absolute volume. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 1,730 calls in the last 10 sessions, compared to just 159 puts. The resultant call/put volume ratio of 10.88 ranks in the 100th percentile of its annual range, indicating a much healthier-than-usual appetite for long calls over puts during the past two weeks.

Meanwhile, now's a great time to target short-term options on JWN. This is according to its Schaeffer's Volatility Index (SVI) of 33%, which ranks in the 12th percentile of its annual range. 


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