Analyst: Sell This Sinking Retail Stock

Skepticism has been ramping up on the embattled retailer

Jun 4, 2019 at 9:59 AM
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Atlantic Equities downgraded Kohl's Corporation (NYSE:KSS) to "underweight" from "neutral," and slashed its price target to $42 from $65 -- a 16.5% discount to last night's close. In reaction, KSS stock is down 0.1% at $49.80, sinking below the round $50 mark.

This negative price action is just more of the same for the retail stock. Since its April 23 five-month peak at $75.91, Kohl's shares have shed 34.5%. And while the shares snapped a 12-day losing streak yesterday by gaining 2%, it's likely this upside came as a result of KSS being extremely oversold, based on its 14-day Relative Strength Index (RSI), which closed at 15.9 last Friday -- the same day the equity hit a 17-month low of $48.71.

There's plenty of room for more bearish brokerage notes to come down the pike, with five of 13 analysts still maintaining a "strong buy" recommendation at last night's close. Plus, the average 12-month price target of $64.06 is a more than 27% premium to current trading levels.

A continued round of short selling could keep the pressure on Kohl's stock, too. Short interest on the retailer spiked 21.1% in the last two reporting periods to 31.4 million shares -- the most since November 2017. This accounts for 19.4% of the stock's float, or 7.5 times the average daily pace of trading.

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