Five Below Stock Plunges on Rare Bear Note

Options traders have been call-heavy toward FIVE over the past 10 weeks

Managing Editor
Jul 20, 2018 at 9:48 AM
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Shares of Five Below Inc (NASDAQ:FIVE) are lower in early trading, after Credit Suisse downgraded the bargain retailer to "neutral" from "outperform." The brokerage firm cited a balanced risk/reward profile, and said it sees the "material outperformance and back-half comp acceleration" now priced into the shares. FIVE is down 2.8% at $204.91, at last check.

More broadly, Five Below stock has been a long-term outperformer on the charts, up more than 125% over the past 12 months. Most recently, FIVE bounced off its rising 80-day moving average in early June, thanks to a post-earnings surge that put the shares on their path to yesterday's record peak of $109.09.

Pessimistic analyst attention is rare for Five Below stock, with eight of the 12 firms in coverage sporting "buy" or "strong buy" ratings. Worth noting, however, is FIVE's average 12-month price target of $102.56 -- which sits at a slight discount to current levels.

Digging into options, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows FIVE stock's 10-day call/put volume ratio of 3.41 in the 89th percentile of its annual range. This suggests calls have been purchased over puts at a faster-than-usual clip during the past two weeks.

Lastly, short interest on FIVE fell nearly 10% during the past two reporting periods, and now represents 9.9% of the stock's total available float. At the FIVE's average daily trading volume, it would take nearly a week for shorts to buy back their bearish bets.

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